Decentralized technologies are starting to revolutionize the financial world as cryptocurrencies are used in a variety of ways to recreate traditional financial instruments. However, since cryptocurrencies are not supported by anything other than being trusted, they are highly volatile. This means that when it comes to the cost of cryptocurrency lending, neither party can be sure of a fair deal.
There must be a way to ensure the value of the borrowed assets, which can be done by ensuring their fair value. This is where real asset coding comes in. The process is very simple when we think of tangible assets like buildings or gold bars, but what about intangible assets like intellectual property?
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The emergence of the creative economy has meant that intangibles account for over 90% of the market value of the S&P 500, and this figure will only grow. There must be a way to unleash more creativity to realize the potential of human capital.
Initiator of seed funding
Finding a head start in the creative economy is a major challenge, especially for beginners. As many entrepreneurs in the sector are discovering, it is sometimes easier to give up on a good idea than to start a business.
Creativity, by definition, destroys what came before; It’s about new ideas, new technologies, new products, new services, and new ways of doing business. Many creative industries are largely driven by the digital revolution, and they are innovative in not only what they do, but how they do it.
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Fundraising can be difficult for several reasons. On the one hand, banks and investors tend to be conservative. They love security and are unlikely to be influenced by an avid entrepreneur convinced that a new, untested idea – be it a design, a software tool, a fashion concept, or a video game – will be commercially successful. In addition, banks want to secure their loans, but many creative companies are not receiving capital injections.
A stumbling block in the state
Investors specializing in creative industries can recognize the genius of an entrepreneur. But in exchange for investment, they often want to own the idea and therefore control its development and commercialization. This may seem unacceptable to a creative entrepreneur who prefers debt financing in the form of loans rather than equity financing in the form of joint ownership and control of a business with an investor.
Alex Shukur, founder of DEIP, a company that creates a protocol for the creative economy, explained to me: “In order for creators to symbolize their business and their security in order to receive funding, a package of smart contracts is needed that can register assets on the chain, issue NFTs, evaluate assets and manage guarantees and liquidation in the event of default. ”
Creative Economy Lending Framework
Just as loans can be made in the real economy on the basis of guarantees, they can also be made in the creative economy.
Imagine a game developer (let’s call her Jane) starts a side project. After some time and positive support from friends and family, Jane decided to take the step to make a side project a permanent job. But after a few months, and more slowly than expected, Jane’s money began to decline. They start thinking about staff roles again. This situation is typical for novice creators.
However, with a decentralized intellectual property platform, Jane’s progress in her work can be assessed through a decentralized grading system that gathers people’s experiences in the field to give an unfinished creation an assessment based on the intrinsic value of an idea. This internal value is used as input to the escrow account – the amount of the loan to which it can be issued. Jane can use his proposed loan for whatever they like; In this case, to support yourself in completing the development of the game.
In addition, a small loan can be provided for beginners with or without collateral. If Jane doesn’t have a project, clear or partial, they still have the option to get seed funding as a newcomer to the platform. The loan amount will be less because it is unsecured and the loan itself is supported by the Decentralized Autonomous Sector (DAO) and budgets derived from its ecosystem fund. The sources of this fund are transaction fees and payments for allocating bandwidth to the underlying blockchain.