The movement of Decentralized Finance projects has increased since the commencement of the crypto craze. On several blockchains, new DeFi projects are surfacing. From tokens to protocols that leverage Blockchain capabilities, the ecosystem is booming.
DeFi applications, like traditional banks, allow users to borrow, lend, earn interest, trade assets and derivatives, and so on. People who want to borrow against their crypto assets to make even bigger bets frequently use this collection of businesses.
There are two fundamental distinctions from traditional banks. All services are for digital currencies rather than government-issued ones like the dollar and the euro, and transactions are completed without an intermediary or centralized system. This means more significant levels of speed, privacy, and reduced cost.
Despite the distinct solutions that DeFi offers in place of traditional finance, the general issue when it comes to lending and borrowing against your crypto assets is trust. Simple smart contract audits of transactions are not enough. Scams and funds being stolen are rife in the ecosystem. Knowledgeable and high net worth individuals fall to the risk inherent in the market. The worst part is that, in most cases, money is lost forever.
Hacks and other unforeseen platform exploits had compromised over 5% (50 million USD) of the 1 billion USD locked in DeFi projects as of June 2020, according to Prysm Group study. Since then, as the total value locked in DeFi projects has increased nearly 15-fold, projects have been compromised using technical and economic hacks ranging from re-entrancy to oracle manipulation.
Therefore, there’s a need for a risk-averse system to help reduce or eliminate existent risk while ensuring that investors’ or lenders’ trust isn’t breached.
The Astra Assurance Layer protocol is a DeFi project that enables crypto holders to safely lend and borrow with their crypto assets, with wrong transactions being promptly repaid because all loans include a built-in dispute resolution tool.
Astra Assurance Layer
While more and more projects are investing in governance research and development, the field of dispute resolution, particularly for on-chain transactions, has received less attention.
However, some conditions cannot be anticipated and accounted for in the initial design of any agreement or contract. Participants may be unsure of what to do when these occurrences occur, or they may wish to renegotiate and chart a new course of action. This means that the first protocol or project code for blockchain projects or DeFi initiatives will never be a complete and exhaustive specification of what should happen in every case. People will have to deal with unanticipated events and upgrades.
When it comes to lending and borrowing, the issue that many faces are that there are no assurances that the agreement matches the smart contract on many occasions.
The Astra assurance layer protocol seeks to integrate a revolutionary legal layer into the existing DeFi platforms to ensure that funds arrive safely at their destinations.
The tech behind this is built on a Proof of Trust system, an inbuilt layer of protection that gives peace of mind across business transactions and contracts by giving a system of dispute resolution that is extra judicial and extra jurisdictional. The mechanism of PoT helps ensures that transactions such as accidental or fraudulent transactions are quickly resolved, keeping parties protected.
Hence, problems like the agreement not matching the smart contract in lending or borrowing transactions will easily be attended to as this consensus mechanism can be invoked at any point in the transaction when a party is dissatisfied. All loan transactions have a built-in dispute resolution mechanism.
With Astra, DeFi projects can integrate an assurance layer that will help ensure that loss of funds is almost impossible while building trust in their products.
Read the full article on Cryptonews: https://cryptonews.com/news/this-assurance-layer-is-bringing-trust-to-the-world-of-defi-lending-and-borrowing.htm