This Assurance Layer Is Giving Institutions the Confidence to Enter DeFi Without Worrying About Frauds or Accidental Transactions
nstitutional participation is key to unlocking the future growth of DeFi. But without a proven dispute resolution mechanism, DeFi is too risky for institutions. Astra eliminates that risk.
“What got you here won’t get you there.” When author Marshall Goldsmith wrote it, he was referring to how successful people can achieve even more success and what sometimes holds them back. But his statement is equally applicable to the growth of Decentralized Finance (DeFi) ecosystem.
DeFi has witnessed explosive growth with the total value locked (TVL) in DeFi protocols rising to $53.7 billion from just $2.5 billion a year ago. Simultaneously, a large number of DeFi apps have emerged to facilitate lending, borrowing, and other services without the high costs, slow pace, and intermediaries of TradFi.
The initial growth of DeFi was fueled by retail investors and traders. Institutions such as banks and large corporations have barely scratched the surface of DeFi. But institutions would play a key role in the DeFi ecosystem’s growth towards the trillion-dollar TVL. What got DeFi here won’t get it there.
Tackling the risks institutions worry about
Where there are transactions, there will be disagreements, mistakes, and disputes.
Sometimes these disputes are resolved between the parties themselves without fuss. But often there are complicated situations that cannot be resolved without an efficient dispute resolution mechanism.
Institutions are a bit hesitant to access and take advantage of the DeFi products and services. For legit reasons, of course.
The stakes are high for them. Imagine a large corporation sending funds to the wrong wallet address or discovering that a particular transaction was a scam. Given that there are very few regulations in place to protect users in such cases, DeFi in its current state is too high-risk for corporations.
Enter Astra, an assurance protocol that adds a legal layer to existing public blockchains such as Ethereum, Polkadot, Cardano, and others. It ensures that the funds reach safely at their correct wallet address.
For a transaction to go through, both parties must use Astra as their platform of choice. The assurance protocol adds a clause in smart contracts to become the default mechanism to resolve all potential disputes including accidental and fraudulent transactions.
If either party is dissatisfied, they can file a dispute and invoke Astra to resolve it quickly and cost-effectively. Both parties can add evidence and share their side of the story. Once the dispute is resolved, the smart contract either automatically proceeds or terminates. The funds land safely in the hands of the correct party.
The assurance protocol is giving institutions trust, confidence, and peace of mind while operating in DeFi.
Astra recently announced that it has appointed former EU Trade Commissioner Phil Hogan as an Executive Advisor. Hogan brings decades of experience in politics, international affairs, and business. He could prove useful in helping Astra roll out its legal assurance layer to governments, corporations, and other institutions around the world.
Businesses have already started embracing decentralized finance and engaging with the whole new financial ecosystem. But given the risks, they would turn to solutions like Astra to feel safe and transact confidently in the DeFi ecosystem. In fact, large corporations including Fortune 500 companies, and government institutions are already using Astra’s full legal layer for peace of mind.