How Astra Solves DeFi’s Major Challenge — Trust
Blockchain has arguably been the standout of the past decade — and rightly so. The groundbreaking technology has experienced rapid development since its inception in 2009. Indeed, it’s all thanks to blockchain for the rise of decentralized finance (or more commonly, DeFi) about a decade later.
By itself, DeFi is more of a philosophy than an actual product; a collective movement pushing towards financial freedom for every human. Although juicy APYs and yield farming helped popularize DeFi in 2020, it’s been around for as far back as 2018.
The DeFi space is a self-sustaining ecosystem of traditional financial products (and services) accessed in a decentralized, trustless, and borderless environment. DeFi’s goal is to enable cheap, fast, and easy access to finance for anyone, anywhere in the world. The decentralized finance movement has helped foster an open, ‘smart money’ economy for every human.
Notably, leading blockchain company ConsenSys tagged 2019 “the year of DeFi”; a precursor to an even more bullish run the next year. Since then, DeFi has continued to enjoy steady growth, even after the initial hype has waned.
DeFi rose to bridge the yawning gap between the haves and have-nots, on the road to global financial inclusion.
The World Bank estimates there are about 1.7 billion unbanked adults. That’s one in every four adults with no access to financial services.
Over the years, DeFi protocols have risen up to offer financial services like spot and derivatives trading, lending/borrowing, staking, asset management among others. By far, crypto-backed lending/borrowing remains the most sought-after product in the DeFi catalogue.
Still, a nagging question remains; “How deep does trust go in the DeFi narrative?”
The Current State of Trust in Decentralized Finance
Yes, decentralized finance is changing the world as we know it, but DeFi protocols are ignoring an important piece of the puzzle: trust.
For one, the DeFi landscape remains as disjointed as ever. Layer 2’s and EVM-compatible chains now abound in their numbers, but interoperability is still a distant reality. Perhaps even worse is a widespread deviation from the ‘money legos’ mantra.
DeFi has opened up exciting opportunities for financial freedom. At the same time, protocols are faced with numerous risks — a function of trust, user experience, compliance, etc. It’s almost as if investors are forced to row in shark-infested waters.
Smart contract exploits, auditing and regulatory compliance issues, poor token design … continue to give room for breaches, rug pulls, and exit scams which all together give the crypto space a bad rap.
DeFi enables a “trustless” environment on paper but, in reality, this is a bit far from the truth. We can’t deny the fact that decentralized finance eliminates the need for trust between peers. But what about the trust between user and protocol — isn’t that important too, or perhaps even more?
Who’s responsible for making sure protocol developers can guarantee the safety of investors’ funds?
How do DeFi lending and borrowing platforms ensure the agreement matches the smart contract?
In the same vein, how can DeFi protocols maintain full compliance with financial regulations?
Trust for All (DeFi Protocols)
Thankfully, Astra provides much-needed answers to these questions.
Naturally, DeFi products should mirror society’s financial regulations without giving up decentralization — not find ways to “beat the system”.
At Astra, we recognize this drawback on DeFi’s road to the mainstream, which is why we’ve built our legal assurance solution from the ground up to resolve deep-seated trust issues plaguing DeFi as a whole.
Astra is a legal assurance protocol designed to integrate a first-of-its-kind legal layer into existing DeFi platforms to ensure the safety of investor funds. Astra provides developers with the tools they need to strictly comply with financial and data protection regulations across various jurisdictions.
Astra makes it easy for them to achieve regulatory compliance in their smart contracts with a fully decentralized compliance layer. This layer sits between DeFi protocols and their contracts to equip the former with KYC/AML capabilities, and enable seamless reporting and dispute resolution.
Furthermore, Astra leverages the expertise of trusted legal and business advisory companies towards resolving real-world trust (and compliance) issues affecting the crypto space.
Thanks to Astra, investors can entrust their crypto holdings to DeFi protocols. We can finally rest in the knowledge that Astra is enforcing strict compliance across the DeFi landscape.
Ultimately, Astra will give rise to a truly trusted DeFi ecosystem where complete trust in DeFi protocols is as easy as breathing.
Astra — A Decentralized Compliance Layer for the Web3 economy.💪