At the Verified Network, we have been working with fixed income investing for a few years. Since early this year, we are investigating ways of how assets like BTC and ETH can be used as collateral to source capital that can be used for fixed income investments.
We found that there are 3 primary requirements
- Base asset / collateral providers need to have a liquid/tradeable token in exchange when they deposit the asset into a pool/platform
- Base asset / collateral providers need a fixed income yield. BTC is being ‘lent’ at 2% pa by major digital asset managers.
- Borrowers need a longer term, fixed rate model. Daily rates are too risky and hard for them to manage.
Compound has great adoption but if we can get 2) and 3) in place, assets will just go up manifold. We do have both base asset / collateral providers and borrowers and we are extending our work on a Compound grant of last year to build the fixed rate wrapper. The audit on our work is still pending which is a good thing in hindsight because hopefully we can use the remaining grant for the audit on this work.
I am writing here to find out if anyone has any ideas and thoughts to share on this topic.