- BarnBridge brings traditional risk-management tools and fixed income to DeFi.
- The protocol’s offering may appeal to institutional players looking to enter crypto.
- The platform is still in its early stages of launching. the product is planned for partial launch in Q1, 2021.
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The potential impact of crypto on traditional finance (TradFi) and institutions has been discussed for years. People like Blythe Masters, who helped create the infamous credit-default swaps, got interested in Bitcoin long before its price went over $19,000.
One of the blockchain’s most potent disruptive forces has been automation. TradFi has dozens of intermediaries in every service, each increasing the costs for the end-users. DeFi can reduce these costs.
While DeFi has a significant potential to take a bit out of an industry worth trillions of dollars, its ecosystem is not mature enough to satisfy institutional needs. Many well-known TradFi primitives have to be ported to the blockchain before big players arrived en masse.
BarnBridge is one of the projects that extend the DeFi functionality to increase its flexibility and efficiency. The team addresses some key aspects of institutional activity, such as risk management and access to fixed income instruments.
The Problem of Traditional Finance
Risk is the cornerstone of any type of financial management. Whether an individual or a large corporation, every market player has to estimate their risk appetite.
Managing risk is more critical and challenging for institutions because of the complexity of their operations. Hence, large players need to fine-tune their exposure to various financial instruments to prevent from going underwater if things turn sour.
On top of that, companies have liabilities, so they need steady cash flows to meet them. Predictable income streams enable financial planning, which in turn helps with outlining long-term development strategies.
Fixed income is also essential for wealth…