Building Institutional DeFi: A Guide to Stakeholder Responsibilities

We previously explored the necessary requirements for compliantly bringing tokenized real-world assets (RWA) and securities to DeFi. To achieve this, DeFi protocols must be designed to restrict participation rights to prevent illegal funding resources. Moreover, the availability of trusted data oracles is crucial to provide pricing data for private assets, and trading venues must be accessible to ensure minimum liquidity.

Fortunately, the emergence of innovative solutions such as ComplyDeFi and the DINO distribution network has made it possible for the current tokenization market to fulfill all of these necessary requirements. However, for the development of institutional DeFi to succeed, it is crucial for stakeholders to understand their roles and responsibilities. Below, we have listed some key roles that are usually required:

• Issuers – They are responsible for bringing real-world assets and securities on public blockchains through tokenization, making real-value-backed assets available to the DeFi ecosystem, and allowing their token holders to participate in DeFi services.
• Deployers – This role involves deploying the smart contracts of the DeFi protocol on the blockchain and setting up the eligibility rules. It can be done easily by implementing the ComplyDeFi SDK, a developer tool for leveraging the identity system ONCHAINID. To do so, they may set up access credential requirements and verifiers.
• Verifiers – These are any authorities and entities who can bring trust, such as banks, regulated exchanges, custodians, auditors, notaries, etc. Their role is to verify user information off-chain and issue onchain credentials or proofs of verification to the users’ ONCHAINID. This approach ensures that no confidential information is disclosed on the blockchain, only the credentials to provide a “yes, verified” response to the DeFi protocols.
• DeFi Users – DeFi applications offer a wide range of financial services such as lending, trading, asset management, and insurance. Typically, DeFi users act as liquidity providers by leveraging their tokens to access services and earn interest through token deposits for liquidity. Additionally, users may choose to deposit their tokens for staking, automated investment, or into a vault managed by an asset manager, among other possibilities. To engage with compliant DeFi applications, users are required to obtain credentials from verifiers appointed by the DeFi protocols.

By understanding these key roles and responsibilities, institutions can find their niche in institutional DeFi, which can open up new business opportunities and facilitate the development of institutional DeFi.

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