Introducing Persistence Protocol: Powering Next-Gen Financial Products
The missing link between decentralized finance (DeFi) and centralized finance (CeFi) is that the former only interacts with cryptocurrencies such as Tether (USDT) and Bitcoin (BTC). By contrast, traditional finance deals primarily with fiat currencies. Although it is easy to convert fiat currency to cryptocurrency, using real-world assets as collateral on the DeFi platform is not the case. What if there is a way to use real world assets as collateral on these platforms? This is what the persistence agreement tries to achieve.
What is Persistence Protocol?
Persistence is an agreement that supports institutions to open finance. Persistence builds a bridge between DeFi and traditional finance by promoting the use of real-world assets as collateral for borrowing crypto assets. This blockchain-based project aims to free borrowers from negative interest rates provided by some central banks and economies around the world. In context, negative interest rates produce losses rather than gains. According to this, the vision of the project is to use NFTs (non-homogeneous tokens) to represent invoices and other real-world assets, and then exchange these NFTs in exchange for USDT and other stablecoins. Additionally, NFT is used to initiate loans and pool the loans to create debt securitization. The activities on the decentralized platform are compatible with the persistence token called XPRT.
The Persistence Approach
The network has two methods: asset-based loans and debt pools.
Asset-based loan: These are credits that allow invoices, inventory, etc., to be used as collateral. The asset-based lending in the agreement is supported by Comdex, a decentralized platform that powers commodity transactions. In essence, Comdex connects raw material buyers with physical raw material sellers. The platform has processed more than $10 million in commodity transactions.
Debt pools (debt securitization): Debt pooling involves asset originators combining assets that generate cash flows to form one or more asset pools. Therefore, the combined assets generate interest. Persistence has an ecosystem where financiers can process multiple loans on the Comdex platform and retain invoices as collateral. These debts are divided into several groups based on the level of risk, major financiers and other factors. Then, the project uses dApps to allow stablecoin holders to provide liquidity to the group and obtain returns.
Persistence Token and Chain
To power communications with other blockchain-based platforms, persistence uses inter-blockchain communication (IBC) protocols.
- Persistence Main Chain
To realize its vision, the project has a stack with Persistence Chain as the core of its debt market and software development framework, enabling institutions to build and run applications. The persistence backbone uses the dPoS (delegated proof of stake) consensus mechanism, and its security is provided by decentralized validators. However, depending on the business model, the application chain may have custom security measures.
2. Persistence App Chain
The persistence protocol also hosts an “application chain” that is specific to the application logic. They are business oriented and protected by the main network chain. The SDK layer of the stack supports a way to easily connect markets and exchanges. Applications focused on retail and institutional finance are placed in the Persistence dApp layer.
3. Persistence SDK
The protocol software development kit (SDK) is a set of tools for market modeling to facilitate value exchange. They can be easily merged with existing dapps. As a bonus, the SDK can also be used in different permutations and combinations to create a whole new market.
4. Persistence DApps
OpFi dApps primarily deal with the mix of borrowers and investors or lenders, and run on a specific application chain in the protocol. Persistence intends to access cryptocurrency and institutional liquidity at the dApp layer in the following ways:
- Providing institutional solutions backed by public blockchain technology, which will allow new capital to enter the crypto field by taking advantage of the institutions’ liquidity.
- By using crypto liquidity to provide institutional products for cryptocurrency stakeholders, once the stablecoin market stabilizes and the rate of return declines, this will also provide new opportunities to generate high returns.
In conclusion, in order for institutional investment to flow into the cryptocurrency field, traditional institutions must be satisfied with these digital assets. This convenience can come from a trusted platform like Persistence, which bridges the gap between these two worlds. In addition, the interconnection of encrypted assets and real-world assets is the key to financing small and medium-sized enterprises. Small and medium-sized enterprises have long been obscured by large companies in obtaining loans. This will be possible by reducing or eliminating barriers to maintaining virtual currencies and adopting decentralized protocols that fully address data privacy and security issues. Persistence effectively solves these problems by using a stack composed of application chains, SDKs, dApps, and persistence tokens (XPRT) to complete the cycle.