One of the major themes of 2019 in the cryptosphere has been DeFi, or decentralized finance. Predominantly built on Ethereum, financial protocols aim to change the way people transact and save their money by allowing them to do so in a permissionless, overcollateralized manner. As per the Financial Express, Nuo is planning to launch a neo-bank named Juno in 2020, November 25, 2019.
Deciphering the Need for a New Credit System
Many of those who are genuinely in need of a small financial lifeline to get themselves back on track find themselves stuck in the credit trap the global financial system has created. Getting a loan through banks or other financial institutions is a bureaucratic and time intensive process.
Lending platforms like Nuo, Compound, and dYdX have the potential to change the way people save in today’s time. Using Nuo, one could lend out money and create a de facto savings account using stablecoins in place of fiat money. The rates are currently attractive for residents of both, developed countries and emerging markets.
Varun Deshpande, CEO of Nuo, says a lot of their lending activity comes from the Western world as banks have incredibly low-interest rates relative to Ethereum’s open financial stack. But in reality, even emerging market residents could boost their savings by doing the same. Firstly, by holding DAI instead of Indian rupees, one could eliminate value lost due to rupee depreciation. And then with interest rates in the range of 2-6 percent, earn even more on those digital dollars.
Competing in Open Finance
With the launch of new protocols on a weekly basis, competition is really busting up in open finance, with a specific focus on trustless exchanges and lending/borrowing protocols.
Nuo’s planned online banking initiative, Juno, will offer users from across the globe with the opportunity to earn 5.5 percent annual returns on deposits; and unlike traditional banks, there are no lock-in periods, hidden fees, or any other shady business. What you see is what you get.
Permissionless finance has a long way to go, but the current trend seems to be set on changing the way people save money. While borrowers seem to be more savvy traders looking for permissionless margin financing, lenders are mostly comprised of regular users trying to navigate their way through this complex space.