DeFi in the Emerging Markets: Brú Finance is Pioneering Lending Against Real-World Asset NFTs
Brú Finance has taken up the challenge of connecting Decentralized Finance (DeFi) and real-world assets. It is one of the first DeFi protocols that are bridging Blockchain Finance solutions with the DeFi ecosystem.
Our journey started in 2019 with a blockchain lending platform for commodity finance. With the help of this platform, farmers in India are able to store their commodities in the custody of secured warehouses and can choose to borrow against their commodities. For borrowing, the products stored in warehouses can be used. Farmers enjoy several benefits from using the platform, such as enhancing their holding capacity and reducing the distressed sale of their products at low prices.
At the time of harvest, the prices are low because of the increased supply of the products in the market. In earlier days, because of the lack of liquidity in the hands of the farmers, they were forced to sell their agri-commodities at a lower rate, missing the opportunity of earning more income by selling at a higher rate at a later part of the year. Farmers have been facing socio-economic problems like high-interest rates for loans from private moneylenders’ exploitation, and debt traps, resulting in depression and sometimes suicide.
On our blockchain platform, an NFT is backed by the commodities stored in the warehouses. Lenders in the centralized finance system, like banks, give loans to farmers against these NFTs.
To date, Brú Finance has tokenized commodities worth more than the US $500 million on its platform.
How Brú Finance is changing the world
The DeFi space is driven by speculative crypto assets. We are focusing on the unbanked, small-scale owners, borrowers, etc. by linking their real-world assets with NFTs. As real-world assets (RWAs) back these NFTs, they provide stability and security to the users.
For ages, people have been relying on RWAs as they are tangible, traceable, and credit-worthy assets. With the adoption of RWAs in the DeFi ecosystem, Brú Finance is bridging the gap between the real world and the crypto world. On most other tokenized asset-backed lending platforms, they expose the lenders to the volatility of the cryptos.
As the Brú Finance platform is a decentralized platform, there is no need for tedious paperwork or the involvement of intermediaries. Thus, this system is accessible and open to all the participants. This strategy prevents the entry of fraudulent and corrupt practices.
For valuation and assay of the quality and quantity of the assets represented by these NFTs, Brú Finance uses credible third-party market data, along with a combination of centralized and decentralized oracles.
Why are Brú Finance’s lending and borrowing platform unique?
In the existing DeFi systems, it is mandatory to use cryptocurrencies or digital assets as collateral for borrowing. But, Brú Finance uses real-world assets as collateral, ensuring tokenization for real-economic activity, with no need to invest in digital or crypto assets with an underlying risk of price volatility.
If compared with crypto assets, the volatility ratio for real-world assets is much less. Brú Finance has a collateralization ratio of 140% for lending against tokenized commodities, which is around 700% for many lending platforms working with cryptocurrencies and certain stable coins.
Brú Finance lenders are protected against speculative spikes in the value of collaterals because of the adoption of trusted third-party data and a blend of centralized and decentralized oracles.
Brú Finance has opened up a new investment avenue for lenders with funds at low-risk lending against $250 Trillion worth of real-world assets.
Moreover, this journey has been strongly supported with multiple awards, accolades, and a handsome amount of acknowledgment that Brú Finance has garnered from all over the globe over the last few months
- Brú Finance won the Social Impact Bounty Winner – ETHDenver, USA as one of the top five projects and as the best dApp, tool, extension, plugin, or fix on ConsenSys Quorum
- The Federation of Indian Chambers of Commerce and Industry (FICCI awarded us the title of Best Digital Intervention in Agriculture) in 2021
- The runners-up at the Build for Bharat program by Binance, a DeFi-focused Hackathon in India, based on the vision of the initiative — Polaris Accelerator Programme: an initiative designed under the Blockchain for India Fund.
- The title of Innovation in Fintech category from the FinTech India Innovation Awards (FIIA)
- Selected as one of the Top 5 startups in SDGi Accelerator — UN Technology Bank & UNDP Turkey