Real-World Assets in Decentralized Finance

Introduction

In its current form, DeFi is a highly reflexive system. A large degree of its capital growth and yield is derived from the speculative trading of tokens. However, speculation feeds liquidity. As DeFi builds the base liquidity primitives it needs, speculation being the dominant activity is guaranteed.

However, in order for growth to be sustainable in the long-term and attract mainstream usage, DeFi has to create stable sources of value for users. Arguably, this has already been happening, albeit gradually. Whether it is reducing the cost of capital by replacing financial intermediaries or allowing users exposure to synthetic assets, DeFi has managed to create real services demanded by willing consumers. This, however, is not sufficient to change DeFi’s speculative image, and many believe that to truly scale DeFi and make it useful, it has to be connected to the off-chain w