MakerDAO Takes Swing at Traditional Banks: Offers Decentralized Mortgage Financing

pLast monthnbspa hrefhttpsmakerdaocom targetblankMakerDAOa the largest decentralized autonomous bank in the world took a swing at the traditional banking industry when they started offering decentralized mortgage financing to users who were looking to fix and flip houses Maker requires users to deposit collateral in the form of ETH and in return issue dollardenominated loans in the form of their native stablecoin DAI Users then take their newly minted DAI use it to fund the renovations on their home sell their home for profit repay their initial loan plus interest recover their collateralized ETH rinse and repeatppIf traditional banks were nervous about thea hrefhttpswwwcoindeskcommakerdaooncollisioncoursewithbankingregulators targetblanknbspemergence of definbspadecentralized finance before this new innovation is sure to send shivers down their proverbial spins Not only is there no need for preapproval or applications on MakerDAO but the fees are also much more competitive due to the lack of regulation and compliance cost needed to secure such defi loans Essentially anyone holding ETH can lock up their crypto as collateral and receive a loan no questions askedppWhile this service offering is still in its pilot phase in the US MakerDAO already secured K in loan financing last month They are targetingnbsp million in realworld loansnbspby the end of this year spanning from freight invoice lending financing of US farm properties and loans to solar facilitiesppnbspppstrongWhat This Means for DefistrongppWhile most activity in the defi space has been mostly relegated to cryptonative assets this feels like the first time the gloves are coming off and the Defi space is ready to directly compete with traditional leading institutions Not to be easily outdone this will surely spark a flurry of lobbying from traditional financial institutions to impose strict regulation on the defi industry quotIf you cant beat them regulate them out of existencequot While the multitrilliondollar banking industry is surely a formidable opponent my thesis on this is simple the market always chooses what isnbspbetter faster stronger If I was forced to bet Im putting my money on defi p