Review of Depository Network

[frauswif]

Depository Network: Digital Assets as Loan Collateral

The easiest way to describe the Depository Network is that it combines traditional lending and blockchain technology. DEPO is a decentralized depository service for banks and other money-lending institutions (sub-prime lenders, consumer finance companies, crypto lenders and P2P lending platforms) world-wide that allows them to accept digital assets as loan collateral. Thereby, unlocking the financial value of the cryptocurrency market, estimated at roughly $400 billion. Considering this untapped value, it is no wonder that the financial industry is looking at crypto as the new collateral. Will digital asset lending become the new norm? If so, how are fin-tech companies going to secure digital asset collateral in a viable marketplace? This article will explore how the Depository Network intends to answer both questions.

What Needs does DEPO Meet?

The development of the Internet has led to the creation of digital assets. A digital asset is anything that exists in a binary format and includes usage rights. Examples include cryptocurrencies, tokens, asset tokens, tokenized shares, and digital bonds. These globally are traded assets that have seen a dramatic rise in value with predictions of more massive growth in years to come. In addition to newly created blockchain assets, we are witnessing the beginning of blockchain digitalization of a huge number of assets from the traditional economy. In the near future, all commercial assets and shares, and most corporate bonds, government securities and globally-traded derivatives could be digitized or tokenized - enabling anyone worldwide to access them.

The problem is that currently financial institutions use depository services for real asset collateral but no such depositories exist for digital assets. This results in locked financial value for a market with huge capitalization. Thus, how enable the value of digital assets and develop the necessary blockchain infrastructure for their use? On the one hand, digital assets do not have the necessary liquidity for borrowers to be able to take advantage of their value quickly and easily. Borrowers must sell these assets to take advantage of their value, which involves high fees/taxes and eliminates the opportunity to profit from these assets in the future. On the other hand, it is expensive, time-consuming, and inefficient for lenders and private companies to build their own digital asset depositories.

Unlocking the Value of Digital Assets

Enter: DEPO. Any lender can use the DEPO infrastructure to build custom depository platform and accept different types of digital assets as collateral. The terms for the collateral contracts are defined by every lender individually. This service makes digital asset holders eligible for secure loans from certified banks or credit institutions. The system uses cryptographically-secure multi-signature wallets and smart contracts, and the borrower always has one of the keys for signing a transaction. Thus, holders retain ownership for the entire loan period.

What Makes DEPO unique?

There are several peer-to-peer lending platforms that accept certain types of cryptocurrencies – usually Bitcoin and Ethereum - as collateral for loans. However, these platforms work either as a marketplace connecting lenders with borrowers (thus bearing the entire risk for KYC and personal identification), or as lenders who use their own funds to issue loans to the borrowers. The DEPO model is very different. It does not provide loans directly, but enables lenders to integrate with the Depository Network and use it to accept digital assets as collateral. This avoids the risk of keeping personal data or having to be compliant with the regulations of different government – the lenders are responsible for this part. DEPO is solely providing a customizable solution to broaden their loan portfolio.

Token functions

The DEPO token will be used for lenders' annual membership. No membership is required from borrowers. The borrower will pay small fees for deposit collateral in every case. The total supply of DEPO tokens will be 3 billion with half being available for purchase through the token sale.

Conclusion

If successful, Depository Network will be the world`s first multi-platform network that enables digital assets to be used as collateral, which is crucial for mass adoption of using blockchain assets in traditional lending. DEPO would remove the need for state-owned, centralized depositories and allow any lending institution to build independent depositories within the system. At the same time, it would allow digital asset holders access to the full values of what they own. There is definitely a need for such a service but it remains to be seen whether DEPO will be the player that meets it successfully.

Website: https://depository.network/
Explainer video:

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[metall140s]

This project has a good idea, but it is not new.

[frauswif]

It's true. I think this is one of the areas where we'll see a lot of competition for a while before a few successful projects rise to the top. Hard to say which ones it will be at this point.