Use Cases: DeFi for Securities


Blockchain is still in its infancy, where early adopters and developers wax lyrical about confirmations per block, blocks per second, scalability, throughput, and byzantine generals, while crypto evangelists talk about self-custody, decentralization, and censorship resistance.

These are, of course, incredibly important, but when it comes to mainstream, institutional adoption, we need use cases and to understand what this all means in practice.

Dusk Network is focused on not only being a great blockchain to use, but on being a blockchain that can break out of the crypto sandbox, take blockchain mainstream, and be so efficient and effective that you don’t even know you’re using blockchain.

DeFi for Securities

A big part of Dusk Network’s mission is to tokenize securities. To do this we’ve had to develop multiple features from zero-knowledge proofs to Citadel (our KYC/AML solution) to Zedger (our wallet for securities) not to mention our focus on regulation.

But why tokenize securities and go to so much effort? Why not just play the L2 scaling game or the “We’re faster than Ethereum” game?

To make DeFi - decentralized finance - real and meaningful.

As it stands right now there’s a huge separation between how you can use DeFi and how you can use real-world assets (like fiat, securities, equities etc) that are completely different.

In the world of DeFi, you have self-custody of your assets (well, your wallet/private keys have custody of those assets, we’d like to see real self-custody where it’s based on identity, but that’s another article), you have anonymity (well, pseudo-anonymity, but that’s also another article!), you can lend and borrow tokens permissionlessly, and you can send tokens between wallets in moments.

The problem is that these assets can’t be used in the “real world” and they don’t have much meaning. Most crypto tokens do not represent a revenue-generating token, they represent a farm token or a governance token.

What if you could trade with the ease and benefits of DeFi, but if you could own traditional assets that generated revenue and existed in the “real world”?

The business case for DeFi x Securities

Whether you invest in traditional financial assets or not, you’ll be aware that the crypto market capitalization is small compared to traditional finance. At the time of writing the crypto market capitalization stood at$1.23 trillion, while the market capitalization of the S&P 500 is ~$35 trillion.

Businesses can see the benefits of blockchain and DeFi. They would like to settle transactions in seconds not days, they would like to reduce the costs associated with brokers and middlemen, and they would like to get on-chain if the conditions are right.

Opening up the innovation of DeFi to traditional financial institutions creates a world of opportunities, not just for them but for normal people too.

If any asset can be tokenized and brought on-chain, if the owner can have custody of any asset, rather than it being held by an intermediary, and compliance can be programmed, we may well find ourselves in a whole different financial landscape.

One that is faster, cheaper, less prone to censorship, and that makes more sense for the modern world.

“I’d like to tokenize my house, please”

In the current system assets cannot be used interchangeably; a home ownership deed is not the same as a security which is not the same as a piece of art. On-chain, it’s all bytecode and can be used in much more innovative and creative ways.

Businesses and institutions would also have access to increased liquidity, which is currently fragmented and inefficient. Innovation would be able to thrive and we’d likely see new and useful developments.

Finance would be freer and more efficient, with less money spent on compliance and replicating processes, and more resources spent on development or even making services cheaper for customers

DeFi for securities opens up a whole new financial world, one that we’re excited to see.