DeFi the odds with help from Astra
Although decentralized finance is becoming more popular among major institutions, the associated risk is still a deterrent for some. Astra Protocol could be the catalyst to encourage major institutions to participate in DeFi safely and securely, allowing the market to reach stratospheric heights.
In the wake of some turmoil, DeFi continues to break boundaries and upset the doubters as the market continues to expand. As of the 10th of October, the Total Value Locked (TVL) reached $206 billion before slipping slightly. Perhaps even more interestingly, analysts have identified a more significant influx of funds from large institutions into the DeFi market. Chainalysis reported that:
“Large institutional transactions, meaning those above $10 million in USD, accounted for over 60% of DeFi transactions in Q2 2021, compared to under 50% for all cryptocurrency transactions.”
However, while institutions are beginning to participate, many big players are still cautious about DeFi. CEO of digital asset trading and lending firm Genesis, Michael Moro, believes that “Errors and mistakes that you’ve seen certainly make institutions shy from doing anything in size, in any particular platform.”
The issue is that every week there appears to be a new hack or exploit relating to a DeFi platform. Even the more well-established protocols can still fall foul. Last week, Compound, one of the most prominent lending platforms, experienced a bug in a smart contract that left millions of dollars vulnerable. While big institutions are often willing to take measured investment risks, the fact that they could lose tens of millions in a scam is too much risk for most.
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Regulators have also been concerned about the amount of criminal activity. The SEC and others are looking to make sure DeFi protocols “play by the old rules that govern traditional finance”. By bringing regulation to participants, DeFi users would be accountable for their actions. Hacks and scams would become more of a challenge for criminals, and the associated risk reduced.
Astra Protocol is the decentralized legal layer that allows DeFi protocols to comply with regulations without becoming centralized. Astra has been designed and built to verify information in different settings. We have developed a patented technology layer that selects the most suitable experts (Delegates) to examine the evidence, data or contractual information and return a fair decision based on their findings. Astra technology can verify the credentials of would-be DeFi users on behalf of other decentralized organizations. Upon receiving a request from a new user, the DeFi platform would request Astra as the decentralized compliance layer without requesting and storing KYC information themselves.
Astra Protocol helps DeFi platforms comply with regulations and enhances consumer protection. Thanks to Astra, institutions can receive the security they require to participate in this exciting market.