Bill Barhydt is the CEO/Founder of Abra.
It’s widely accepted that our current banking system has significant flaws. Beyond systemic and geopolitical risks — like restricted borders, time zone barriers, and central bank dependencies — there are challenges with bank wires, international settlements, and the inconsistent availability of credit. A fundamental issue lies in the mismatch between banks' balance sheets and their leverage.
Tokenizing physical assets like real estate or government bonds creates similar opportunities, although it requires oracles to provide real-world pricing and cash flow data. As this ecosystem evolves, individuals and institutions will increasingly use a broad range of tokenized assets to access lending services, unlocking liquidity and expanding borrowing options across global markets.DeFi protocols are creating 24/7 marketplaces for lending, borrowing, and asset swapping.
In this setup, loans are secured by digital collateral, and if the value of the collateral decreases, the borrower either adds more collateral or risks liquidation — ensuring a healthier lending environment without the opaque risks present in traditional finance.Perhaps the most revolutionary aspect of DeFi is the ability for individuals to become their own banks.
With tools like separately managed accounts , users can hold their assets in their own digital vaults, free from the balance sheet risks of banks. This level of autonomy mirrors traditional financial strategies but extends them to the realm of crypto, giving people unprecedented control over their financial future.In the coming decades, DeFi will become the backbone of financial services.
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