The Tie Research
Real World Assets: Finance’s Bridge to Crypto
By Vaish Puri
April 28, 2023
- Over the next ten years, investors will demand new investment opportunities due to the overall transparency and efficiency of DeFi, as well as a general environment of suppressed rates (which is now changing). Investors will also demand higher-yield opportunities than what their traditional banks and institutions can provide.
- Global economic activity will shift to an on-chain model, making every transaction transparent and resulting in the creation of a new public good: an immutable, publicly available credit history, as well as a reduction in the significant transaction costs associated with banking.
- Derive expected cash flows: For every outstanding financing of an asset, the expected cash flow is calculated. This is based on the expected repayment dates and the expected repayment amounts.
- Risk-adjust expected cash flows: Cash Flow is risk-adjusted for credit risk by the expected loss. The Expected Loss is calculated as Expected loss = Expected Cash Flow * PD * LGD and subtracted from the expected repayment amount to adjust for credit risk.
- Discount risk-adjusted expected cash flows: The risk-adjusted expected cash-flows are discounted with an appropriate discount rate (this depends on asset class and pool) to derive the present value of a financing.
- Calculating NAV: Adding up the present values of the risk-adjusted expected cash flows for all financings in the pool leads to the NAV.
- Lenders use TrueFi to access opportunities across a range of portfolios.
- Borrowers, after vetting, depend on TrueFi to quickly access competitively priced capital with no collateral lockup, allowing them to maximize capital efficiency.
- Portfolio managers use TrueFi to set up on-chain portfolios, bringing the benefits of blockchain to their investing activity - such as 24/7 access to global lenders, greater transparency, and lower operating costs.
- TRU Holders effectively own and govern the TrueFi protocol, making both the key decisions and contributions necessary for TrueFi to grow, using open discussion and on-chain voting.
- Passive MPL Holders earn a portion of establishment fees.
- Savvy MPL Holders can earn additional yield by selecting Liquidity Pools to stake
- Staking MPL-USDC 50-50 BPTs provides a reserve covering loan defaults in return for a share of the ongoing fees.
Stay up to date
Sign up to receive an email when we release a new post
aaveAMLcentrifugecredit protocolcredit riskcryptodefiEmerging marketsgoldfinchKYCliquiditymakermaplemaple financeNFTon chain creditReal world assetsRWASpecial purpose vehicleSPV
