Welcome to the DeFi Frontier, a weekly newsletter about DeFi innovation for the real-world. At Tribal, we are passionate about leveraging crypto to solve real problems for mainstream consumers and enterprises (see our thoughts here and here). This newsletter will highlight progress made by ecosystem builders towards that goal, as well as challenges that arise along the way. Come along with us as we venture towards the frontier — onward and upward!

News Wire

Lending and borrowing

• Feb 3 — Centrifuge accrues $6mn in delinquent loans. Two pools on the real-world asset financing protocol Centrifuge are overdue in payments. Centrifuge pool issuer 1754 Factor, which holds bonds from French microloan company Bling, has $5.1 mn in payments overdue, with some payments more than 150 days past due. (Link)
• Jan 25 — Maple Finance announces real-world asset pool. After a grim 2022, marked by defaults from crypto-native borrowers like Orthogonal Trading, Maple is attempting a pivot towards real-world assets (RWA), beginning with a trade receivables pool launched with UK fund AQRU. Maple’s total value locked (TVL) has declined from nearly $1 bn in April 2022 to just $64 mn. (Link)
• Jan 10 — Ondo Finance announces tokenized US treasuries. Security tokens issuer Ondo Finance announced the launch of tokenized versions of popular bond ETFs. Launched on Ethereum, these tokens represent shares of ETFs holding Short-term U.S. Government Bonds (OUSG), as well as corporate bonds (OSTB and OHYG). Ondo hopes to expand access to stable, competitive yields for global investors. (Link)

Money movement

• Feb 6 — Visa explores high-value USDC settlement on Ethereum. In an StarkWare Sessions event, Visa Head of Crypto Cuy Sheffield said that the payments network is testing USDC settlement and payouts, similarly to how Visa processes all foreign currency transactions. Per Sheffield: “The same way that we can convert between dollars in euros on a cross-border transaction, we should be able to convert between digital tokenized dollars and traditional dollars.” (Link)
• Jan 31 — Strike launches remittance service in the Philippines. Strike’s service, Send Globally, runs on the Lightning Network and permits recipients to accept funds in a local bank account or mobile money account. Send Globally has also launched in Nigeria, Kenya, and Ghana. (Link)

Commerce

• Feb 3 — South African retailer Pick N Pay accepts Bitcoin in all 1,500 stores. Customers of the South African retail chain can now pay in BTC via Lightning Network QR codes at the point of sale. (Link)
• Jan 30 — Mastercard and Binance launch card in Brazil. The Binance Card is currently in beta testing and should be launched widely in the next few weeks. Binance’s card launch represents another salvo in the competition for dominance in Latin America’s largest crypto market. (Link)

Analysis

After a bruising end to 2022, crypto markets have halted their freefall, but the recovery has so far been unimpressive. BTC has now been above $20K for two weeks, but a bull run in the near-to-midterm is highly unlikely. The 2020–2021 bull market was fueled in large part by crypto experimentation by millions of average, bored-by-quarantine consumers, many of whom bought crypto at all-time-highs and subsequently lost money when markets collapsed. Those speculative masses are not likely soon to return to crypto, and the era of Matt Damon/FOMO marketing for crypto investment seems to have passed.

Does that mean the end of crypto? Hell no! Soaring asset prices were exciting to see, but as we now know, for most tokens, this reflected pure speculation rather than organic uptake and utility-based demand. And those soaring prices and frenzied markets had nothing to do with the true potential of crypto. After all, Satoshi didn’t write a paper entitled “Bitcoin: A fad investment that your weird uncle will write to you about on Facebook Messenger.” Satoshi was concerned with solving real problems that affect real people, and countless crypto ecosystem builders are interested in doing the same thing today.

I’ve reflected a lot recently on the Dot-Com Bubble of the early 2000s and its aftermath. In a now famous article from November 25, 2001, the New York Times declared that “Dot-Com Is Dot-Gone, And the Dream With It.” Much like the Crypto Bubble, the Dot-Com Bubble stemmed from powerful enthusiasm for a new technology in its earliest days. In both cases, markets got ahead of themselves, and some risky bets fell apart. But just as before, markets weren’t wrong: this excitement signaled a transformation on the horizon. Revolutionary real-world DeFi use cases are emerging, and they will change people’s lives for the better. Stay tuned as we track this wave of innovation!

DISCLAIMER: The views and opinions expressed herein are those of the speakers and do not necessarily reflect the views or positions of any entities they represent. The information provided does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and you should not treat any of this content as such. Do conduct your due diligence and consult your financial advisor before making any investment decisions.