While it is argued that decentralized finance dates back to January 2009, it was not until MakerDAO’s launch in 2017 that the core tenet of this nascent market was formed. The MakerDAO project enables the generation of the DAI stablecoin designed primarily to rival traditional financial institutions. The idea behind this project was to seamlessly enable users, regardless of location, to borrow and lend assets without a central authority system.
This stablecoin-oriented project pegged to the US dollar laid the groundwork for the creation of a new permissionless, trustless, and truly decentralized market. Decentralized finance seeks to eliminate traditional financial institutions from the borrowing and lending market, making it accessible to everyone regardless of social status and location.
Although beneficial, DeFi is plagued with a few problems, some of which have hindered global adoption. One of such problems is the extreme volatility of the crypto market. Whilst this could be said to be both an advantage and a disadvantage, the recent happenings in the market point to the latter. To address this problem, a few stablecoins have been developed. These coins, like DAI, are pegged at the same value as the US dollar.
These projects like Tether [USDT] claim to have a reserve for every token issued. Leveraging the transparent and immutable blockchain technology, these stablecoin protocols can audit the exact number of tokens issued. The problem, however, lies in the traditional financial institutions that hold the dollar equivalent of every USDT token issued or held in a digital wallet. In fact, a 2019 Forbes article reported that Tether’s US dollar peg is not credible as there has never been a professional physical audit.
To address this problem, The Standard.io protocol was launched.
The Standard.io Protocol
As an Ethereum-based protocol, The Standard is a decentralized finance infrastructure that was created specifically to bridge the gap between traditional investments and digital assets.
Launched in June 2021, this protocol will allow users to generate fiat pegged stablecoins that are duly backed by digital and physical assets. Introducing Standard Euro as the first stablecoin to be issued through the Standard Protocol, this project seeks to revamp the DeFi market. Users will have the ability to lock up digital or physical assets in a Smart Vault to use their existing holdings as collateral.
Spending Without Selling — The Standard Protocol Vision
Ordinarily, token holders in the crypto and DeFi space seeking to spend tokens will need to sell assets via different exchanges. The Standard Protocol, pioneering a paradigm shift in this sector, will guarantee users the opportunity to spend assets without selling the collateral provided.
Through the Standard Protocol, users can lock up digital and physical assets. Instead of selling an asset when there’s a need to purchase a physical product or service, users can seamlessly generate S-EUR against their holdings without having to sell off assets, all without the help of a central system or intermediary.
Besides offering this unprecedented feature, the Standard Protocol seeks to help users save up against looming inflation. Via a Smart Vault that is connected to a blockchain wallet, users can store assets safely and securely to counter future inflation.
Speaking to reporters about the amazing DeFi project, Laurin Bylica, co-founder of The Standard Protocol revealed that it is more than a lending platform. Mr. Bylica further states that this Ethereum-based protocol creates a fairer and suitable alternative to retail banking, enabling users to save physical and digital assets and spend fiat without selling off assets.
