Has anyone here seen this yet?
Huntington Valley Bank (HVB), a Pennsylvania Chartered US-based commercial bank, is seeking a 100 million DAI debt ceiling participation facility to support the growth of existing and new businesses. HVB will get access to DAI liquidity. HVB originates mortgages and commercial loans. Maker is partnering with a trust which provides fiat liquidity and works for the benefit of Maker.
A chartered bank is funding its balance sheet in partnership with a DeFi protocol. This feels significant. As with all "firsts," there are a ton of caveats and complexities under the hood, but this is a watershed moment no matter how you cut it.
DeFi is finding its home as a more efficient capital markets platform. Real World Asset (RWA) lending has gained popularity in DeFi in the past 6 months and makes up a sizeable portion of the MakerDAO balance sheet. Much of this RWA lending has been facilitated by teams like GoldFinch, Maple, and Credix, who help provide capital to emerging markets Fintech lenders.
You could argue that the quality of loans originated via DeFi capital markets is "high risk" so far. Emerging market lending businesses are "high risk" historically because it was hard to get a feel for their long-term performance. The DeFi platforms rely on sophisticated institutions to underwrite this risk and then allow anyone to participate in providing additional capital (following the lead of the institution). High risk might mean high returns, and these emerging market lenders could be misunderstood. But in the long run, credit quality matters, and not knowing = risk.
But a chartered bank has a different risk profile. I'm curious to see if, over time, DeFi has more demand providing capital to lenders more internationally, domestically, or both.
Historically, buying loans as an asset was manual and reserved for the largest institutions because it was high cost (so it was only worth the cost if you could deploy enough capital to profit). Disrupting that cost profile potentially creates much more efficient capital markets. The fact that it runs on DeFi arguably makes it more transparent in the long term. I hope regulators don't break DeFi before it delivers on its potential.
MakerDAO has a real shot at being a "central bank for the internet" at the core of a new, digital, global capital market. DAI and Maker consistently sit in the middle of the "Real World" lending projects. Maker needs to survive being decentralized (and all of the messy governance that comes with it), regulated, and potentially a significant push by central banks to enforce the use of CDBCs. There's a long way to go between now and a new global financial market structure. But change is often slow then sudden.
Huntington Valley Bank (HVB), a Pennsylvania Chartered US-based commercial bank, is seeking a 100 million DAI debt ceiling participation facility to support the growth of existing and new businesses. HVB will get access to DAI liquidity. HVB originates mortgages and commercial loans. Maker is partnering with a trust which provides fiat liquidity and works for the benefit of Maker.
A chartered bank is funding its balance sheet in partnership with a DeFi protocol. This feels significant. As with all "firsts," there are a ton of caveats and complexities under the hood, but this is a watershed moment no matter how you cut it.
DeFi is finding its home as a more efficient capital markets platform. Real World Asset (RWA) lending has gained popularity in DeFi in the past 6 months and makes up a sizeable portion of the MakerDAO balance sheet. Much of this RWA lending has been facilitated by teams like GoldFinch, Maple, and Credix, who help provide capital to emerging markets Fintech lenders.
You could argue that the quality of loans originated via DeFi capital markets is "high risk" so far. Emerging market lending businesses are "high risk" historically because it was hard to get a feel for their long-term performance. The DeFi platforms rely on sophisticated institutions to underwrite this risk and then allow anyone to participate in providing additional capital (following the lead of the institution). High risk might mean high returns, and these emerging market lenders could be misunderstood. But in the long run, credit quality matters, and not knowing = risk.
But a chartered bank has a different risk profile. I'm curious to see if, over time, DeFi has more demand providing capital to lenders more internationally, domestically, or both.
Historically, buying loans as an asset was manual and reserved for the largest institutions because it was high cost (so it was only worth the cost if you could deploy enough capital to profit). Disrupting that cost profile potentially creates much more efficient capital markets. The fact that it runs on DeFi arguably makes it more transparent in the long term. I hope regulators don't break DeFi before it delivers on its potential.
MakerDAO has a real shot at being a "central bank for the internet" at the core of a new, digital, global capital market. DAI and Maker consistently sit in the middle of the "Real World" lending projects. Maker needs to survive being decentralized (and all of the messy governance that comes with it), regulated, and potentially a significant push by central banks to enforce the use of CDBCs. There's a long way to go between now and a new global financial market structure. But change is often slow then sudden.
