At the end of May, the Monetary Authority of Singapore (MAS) announced Project Guardian, which aims to explore institutional DeFi on a public blockchain. At the time, the participants were JP Morgan, DBS Bank and Marketnode, the tokenization joint venture from the Singapore Exchange (SGX) and Temasek. Today Japan’s SBI Digital Asset Holdings announced that it has joined the project.
Two major decentralized DeFi innovations are borrowing and lending platforms based on smart contracts such as Aave and Compound and automated market making (AMM) such as Uniswap for trading. However, these examples are all permissionless, whereas project Guardian is permissioned and targeted at the wholesale market.
Automation without intermediaries is the key DeFi feature that enables greater efficiencies. By reducing costs, financial services can potentially be cheaper for all investors. And instead of restricting some investments to high denominations, fractionalization can broaden access. Another benefit is automation enables 24/7 trading and lending.
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