Synthetic Assets as a Tool for Global Financial Inclusion: Crypto that Can Be Used

Many of the same protections and structures that make decentralized finance desirable to many can at times stand in the way of usability. Not many people have bought a bagel with Bitcoin, and fewer still have bought gold bouillon on the blockchain; however, CrossFi hopes to change all of that. With the same infrastructure put in place to bring banking services to the 1.4 billion unbanked around the world, we have brought investing opportunities to anyone with a digital wallet.

Why DeFi?

Many people choose to invest in decentralized finance (DeFi)  for the freedom it provides, but unfortunately too many of the programs and systems utilizing DeFi are just as limiting, if not more, than the restrictions inherent in traditional financial markets. When it comes to daily purchases such as groceries or utility bills, very few accept payment from digital wallets. When it comes to major investments and purchases, from property to retirement grade investments, these opportunities are even fewer. 

Retirement grade investments often come with many restrictions on when you can withdraw the funds. While they represent wise investments, if you do not need to access any of the returns until decades in the future, these restrictions can be prohibitive for those hoping to realize short term benefits. In fact, getting around such restrictions inherent to traditional financial instruments has been a key motivator for many who have explored DeFi alternatives.

Unfortunately, the DeFi infrastructure has long lagged behind this desire. Within traditional financial systems people have already sought to find ways to resolve discrepancies that keep those who could benefit from such investments from getting a foot in the door. Few can afford the upfront costs required to benefit from the passive income generated by an apartment building or a series of rental properties. At a major level of affluence, high end artworks or rising prices of gold and precious gems will only yield significant dividends to those who already have massive start-up capital.

To get around this, innovators have created systems for crowdfunding and group ownership,  with a recent spike of such platforms enabling partial ownership of valuable pieces of artwork. If the traditional finance sector can innovate to overcome its own inherent limitations, surely the DeFi sector can do the same.

Building A Bridge Between Traditional Assets and DeFi

We must learn from the successes and failures of traditional finance. The greatest teacher can be the prevalence of the aforementioned art investment solutions. Your average salary or hourly wage worker cannot buy a Rembrandt or Picasso, but art represents one of the most reliable investments to grow your assets.

Brexit, Russia’s war in Ukraine, and the current US Administration’s unpredictable trade policies have made currency trading a much more unpredictable venture. But DeFi can learn from the successes of traditional finance. By implementing a more accessible way to invest that holders of digital assets can invest in and gain the benefits of traditional financial assets.

Building on the model exemplified by crowdfunded art investments, CrossFi’s xAssets do just that. Holders of digital assets can invest in gold, real estate, or art. They can do so in a more reliable and accessible way than provided by traditional finance. 

Minimum Infrastructure, Maximum Return

We have come a long way from the days of fixed phone lines, and the early days of dial-up internet. Many parts of the world were able to bypass all of the infrastructure necessary for that as advances rendered it unnecessary. By skipping ahead to the infrastructure necessary for mobile phones, billions have been connected to the grid faster and cheaper than would otherwise have been possible.

The same can be done for banking. Mobile banking already exists in most of the world. Yet, an estimated 1.4 billion people worldwide still do not have access to banking infrastructure. By continuing to build on the lessons learned from the wireless revolution, many of these people can gain access to banks. DeFi can be used to even further expand that access.

Many traditional financial assets require connection to physical markets. Everything from stock brokers to real estate agents takes time and money to put in place. Many of the reasons people get involved with DeFi are to escape these traps. People can use their digital wallets to invest in these assets without having to deal with any of these intermediaries. This increased accessibility, liquidity, and transparency brings  financial opportunities currently unavailable to those untouched by web 3 technologies.

CrossFi has already begun doing so, building it on the back of its existing DeFi infrastructure. CrossFi’s xAssets bridges the gap between traditional assets and DeFi. Synthetic representation of real world assets enables  purchases of gold, or real estate, or artworks. These synthetic tokens can be minted, traded, and redeemed, rendering the value of the same real-world assets. The opportunity to expand access cannot be overstated, with its potential to truly redefine how we interact with traditional financial assets.

Technological advancements  have long been used to help those left behind in the past get connected  with modern systems. Using digital wallets to bring the DeFi world into greater contact with traditional financial assets, the hundreds of millions left out of financial markets can leapfrog their way into the future, and into all of the opportunities previously unavailable to them.

By adding the power of synthetic assets to their platforms, providers of DeFi can build in more usability and accessibility for users. From gold and real estate to art or other investments, users can hold, trade, and redeem these synthetic assets. Importantly, just as this broadens access to traditional assets through DeFi systems it can also expand access to the hundreds of millions worldwide who do not have access to existing financial systems. At CrossFi we have worked to do this through our xAssets, and any and all hoping to expand DeFi while also expanding opportunities should see the opportunity this can present. For both traditional and DeFi markets, barriers to entry keep many from accessing investment opportunities. By eliminating the need to interact with real world intermediaries, and making these markets and tools more easily accessible and usable.