TL;DR: OpFi gives exposure to real-world assets with on-chain synthetics.
Open Finance(OpFi) is a fintech protocol that enables custody of real-world assets on blockchains and enables developers to build applications on top of it. Being open in nature this protocol allows seamless integration of other on-chain apps, and can enable multiple chains to cross-share the asset classes.
Open Finance or OpFi could potentially enable institutional investors and funds to participate in the blockchain, crypto & Defi economy as it removes hurdles of price slippage, offers high liquidity & instant settling while offering complete insurance & custodianship of physical assets. The protocol bridges the gap between traditional finance & Decentralized Finance(DeFi).
Open Finance encourages participation by creating a yield on real-world assets(such as Gold, Stocks etc). This enables long term investors to create further value on their assets
There are Five major components to the Open Finance Protocol.
1. Tokenisation of real world assets
Assets and commodity trading is a multi-trillion dollar market where blockchain can play a pivotal role. However, the institutional funds are still at bay due to high volatility, lack of liquidity, complex experience, etc.
Open Finance protocol enables the tokenization of real-world assets so that they can be instantly traded & easily transferred across the world.
We’re right now doing a Proof-of-Concept with tokenized Gold & Silver, but in future assets such as company stocks, exchange traded funds, bonds, oil etc can be added on the protocol.
2. Instant Trade without the need of exchange
Open Finance allows instant exchange of assets without any price slippage or counter party risks. Instead of trading with an exchange or a user, you directly trade with the smart contract of the asset. The smart contract derives the price of the asset using Oracles and offers high liquidity
3. Instant very low cost loans
Open Finance protocol enables collateralized loans at a low interest rate of 2-5% per annum. This encourages users to hedge their bets.
4. Earn yield on real world assets
Most of the real world assets(such as Gold, Silver etc) do not earn you a yield or interest for just keeping them with you. Using Open Finance you can do just that. You can stake your assets as collateral and earn a yield on it.
5. Universal chain support
Being open in nature, the protocol can enable the sharing of assets between various chains, enabling users to get the best of both worlds – access to more assets, and transacting at a low fee.
For example, in our proof-of-concept, Gold is tokenized on the Tezos chain & Open Finance adds a bridge to it for the Matic network.
More details about the Open Finance protocol can be found here:
For the governance of this protocol, we shall be launching ORO tokens which shall be an ERC-20 compliant token.
Open Finance protocol shall manage multiple asset classes with several financial services built on top of it. This demands a robust and scalable network solution.
After reviewing several promising technologies OroPocket decided to build the Open Finance network on Matic for the following reasons:
1. Matic offers high transaction throughput
Being a financial protocol, it is important for the transactions to be processed swiftly. Unlike the ethereum network where transactions get clogged when there’s a surge – Matic offers exponentially better throughput.
2. The low fees of Matic Network enable micro transactions
The low fees of Matic Network is enabling us to create complex financial products that are inclusive in nature.
3. Matic is Open & Decentralized
Unlike some financial blockchains, Matic is completely open source & decentralized, which helps keep the neutrality of Open Finance Protocol.
4. Deployment on Matic is easy
Since Matic is the ethereum side chain, existing ethereum contracts can be easily deployed on it. This removes the learning curve that come up when building on other chains. There’s a vast talent of pool easily accessible for swift deployment.
5. Passionate community
Matic network has one of the most active communities in the blockchain ecosystem. This enables ease of adoption and access to a large set of early adopters.