Regulations coming to the world of DeFi now seems inevitable, but that may not be a bad thing. We believe this will be the start of a second wave of incredible growth. Some estimates even suggest that the DeFi market could soar into trillions of dollars, provided carefully devised rules are brought in to protect consumers and investors.
First, it is a myth that by enforcing KYC, DeFi automatically becomes centralized. With KYC, a DeFi platform would continue to offer decentralized financial transactions, providing an intelligent solution is available to assist with the due diligence procedures. This is where Astra will be instrumental. DeFi with KYC from Astra will still be able to offer all those innovative products as before, but with greater security and consumer protection. What’s not to love about that?
In essence, DeFi lending and borrowing platforms from the likes of AAVE or Compound aren’t offering anything wildly different from traditional finance platforms. Except, in the decentralized world, you get around 5% interest rates, compared to around 0.5% with conventional finance platforms. The primary reason for this vast difference is due to smart contracts that reduce the need for so many intermediaries, this allows for the attractive interest rates DeFi users experience. These impressive rates will still be available with KYC and enhanced user verification, except major financial institutions will now be more inclined to participate.
Astra technology can verify the credentials of would-be DeFi users so that decentralized platforms can comply with the UK and global regulations and strengthen AML and CFT processes. Our technology is agnostic of the platform and can work with any existing public blockchain. Upon receiving a request from a new user, the decentralized organization would use Astra as the decentralized compliance layer without requesting and storing KYC information themselves, which many are reluctant to do.
The beauty of Astra’s technology is that it uses experts (known as Delegates) from a pool of highly trusted and accountable individuals to review KYC when needed. Many have worked for globally renowned institutions such as KPMG, PwC, EY and Deloitte and bring unrivalled experience and expertise. The platform allows Delegates to work remotely from anywhere in the world, meaning Astra can select the most appropriate people to review each case regardless of location. Whether companies seek compliance in the US or Vanuatu, Astra has experts with the right experience and knowledge.