OpenDAO Connects Real World Assets to the DeFi Ecosystem

By Edward Moon | Analysis From Moon | 23 Nov 2020

The potential for DeFi to create a global asset ecosystem is here. OpenDAO has created a platform that allows anyone in the world to securitize real world assets, and gain access to a much wider investor base. The technology that powers DeFi has the ability to break down the walls that separate national economies, and now, OpenDAO is making it happen in real life.

Assets are everywhere, but liquidity isn't. Think about it – if a person wants to buy shares in AAPL, or invest in real estate, there are multiple levels of regulations to keep them away from the investment they want to make.

OpenDAO has created their own stable coin and the CashBox system, which, in conjunction with an active user base, could change the way that assets are securitized globally. With these tools, any asset can enter the DeFi ecosystem, and gain access to a level of liquidity that wasn't possible before.

OpenDAO Makes Assets Global

If a person has real estate that they want to securitize, it is extremely difficult to do in the present financial system. It's no secret that real estate has made many investors rich, but these deals generally are only offered to people that already have loads of money to invest.

According to HSBC, the global real estate market is worth $228 trillion.

The real challenge is entering that market, as most real estate deals aren't going to be offered to a global investor base. The banks that work with real estate investment also stand to gain substantial amounts of money for their services, which is bad for both the investors, and the real estate owners.

OpenDAO changes the system, and opens up these potentially lucrative deals to anyone on its platform, even if they only have a few dollars to invest.

CashBox is a decentralized order book that works with the rest of the OpenDAO system to allow anyone, anywhere in the world, to buy a part of an asset that has been tokenized with the platform. Real estate can be tokenized with this system, and investors from all over the world can buy tokens in the asset.

Instead of having to limit the asset's value by being stuck with the local liquidity pool, OpenDAO lets asset holders put their valuable property on the global market, and also facilitates the most honest form of price discovery yet.

The Real Value of Liquidity

A market thrives on liquidity. Assets that are exposed to a high-liquidity environment will find their true value, but this is very difficult when investors are limited by national boundaries and restrictive regulations that benefit established interests.

Brookings states,

In financial terms, the “liquidity” of any asset refers to the combination of the degree of ease with which it can be sold (or bought) in a timely manner and the level of costs associated with that sale, either in terms of transactions costs or the acceptance of a lower price in order to find a buyer in a reasonable time”

In some cases, assets can find liquidity in the present market.

However, the liquidity that is provided generally comes from large investors who are able to influence markets to a degree that could be seen as manipulative.

Said differently, the current market liquidity structure favors entrenched liquidity providers, while smaller investors struggle to take advantage of both assets, and the value of their money.

OpenDAO Levels the Playing Field

In addition to allowing investors to enter asset classes that would otherwise be inaccessible, and also giving asset holders new sources of market liquidity, OpenDAO creates opportunities for passive income by incentivizing the use of its platform by lenders at real market rates.

Central bank policy is keeping interest rates at or below the zero level, and many nations are selling bonds at a yield that is below zero. In short, money is now a liability, as it has carrying costs. This market dynamic is divorced from reality, and many people and companies are struggling to access debt on any terms at all.

OpenDAO allows investors to lend on the platform at whatever the market rate for money is, without central bank intervention. The net result of this is access to capital for investors, and interest rates that could easily be in excess of 10% p.a. for anyone who has money to lend.

As central banks and governments steer further into unknown economic theory that is wildly experimental, platforms like OpenDAO may allow the real economy to grow on a global scale.

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Edward Moon
Edward Moon

Crypto trader and analyst.

Analysis From Moon
Analysis From Moon

Analysis From Moon

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