Jul 17, 2023

Introducing Coinchange's Groundbreaking Report on Institutional DeFi and Regenerative Finance

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The Coinchange Research Team, comprising Jerome Ostorero and Pratik Wagh, has written a 40 page research report titled, “Institutional DeFi in 2023, Regenerative Finance (ReFi): fostering adoption through blockchain innovation” This report has been co-authored by real-estate investor Nick Halaris, individuals from Securrency, Toucan Protocol, Goldfinch, and reviewed by individuals from RealT and Polygon

This Coinchange Research report delves into the emerging paradigm of Institutional Decentralized Finance (DeFi), Regenerative Finance (ReFi) - its applications, implications, challenges, RWA Tokenization and the infrastructure enabling its rise. 

Part 1.0 explores the principles of Institutional DeFi, discussing how DeFi offers streamlined financial services through blockchain technology, including payments, trading, insurance, and asset management. Tokenization of assets, facilitated by DeFi, provides programmable business processes, reduces operational overheads, and opens up new product offerings. The report discusses the emergence of Institutional DeFi that meets security and regulatory standards while leveraging DeFi protocols. Institutions are transitioning towards DeFi through examples like J.P. Morgan's tokenization initiatives and the rise of Central Bank Digital Currencies (CBDCs). However, successful implementation requires careful design decisions concerning blockchain use, participation models, and token design.

Securrency, a leader in compliant tokenization, is transforming DeFi by developing an infrastructure that enables seamless value transfer and strict compliance. Their Compliance Aware Token® Framework combines on-chain and off-chain elements for compliance across multiple ledgers.

Part 2.0 explores the strategic implications of institutional involvement in DeFi, focusing on Impact Finance, Regenerative Finance, and Real Estate Tokenization. Impact Finance aims for social/environmental impact alongside financial returns. It funds initiatives like microfinance, green bonds, affordable housing, and education. Regenerative Finance (ReFi) focuses on positive impacts while restoring and rebuilding natural systems for future resilience. DeFi integration with ReFi offers transparency, financial inclusion, and disruption of traditional systems. It allows for new impact investing models and Decentralized Autonomous Organizations (DAOs) for funding and managing initiatives. 

Examples of organizations utilizing this approach include Toucan Protocol, Nori Marketplace, KlimaDAO and Goldfinch. Platforms like RealT and Homebase are exploring the possibilities of real estate tokenization by turning physical assets into digital tokens, making real-estate investment more accessible.

Finally, Part 3.0 focuses on the infrastructure supporting asset tokenization. It emphasizes that while Bitcoin's energy-intensive Proof of Work (PoW) process is often criticized, not all blockchains are created equal. Infrastructure like Celo, a carbon-negative blockchain, Chainlink, a bridge connecting blockchains to real-world data, and Polygon, a suite of Layer-2 offerings are driving the transformative power of Regenerative Finance, contributing to a more sustainable future.

The entire report on Institutional DeFi and Regenerative Finance can be read here

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