As the brutal depths of the bear market usher in another week of fear, uncertainty, and doubt (FUD), it’s easy to lose focus on the benefits of blockchain technology and become disheartened with the market. Price is never a good indicator of success, yet it’s a metric that often grinds away people’s hope for the future.
During the heady days of bull markets, the air is filled with hope, and the considerable upside of volatility draws in waves of newcomers who bring additional money to swell the market’s liquidity. In this situation, the rising tide truly lifts all boats, but having a singular focus on price action often misses the incredible benefits of the underlying technology.
The pioneering aspect of blockchain technology is that it seeks to revolutionize and democratize everything from property ownership to banking. However, changing how the world works comes with significant costs and risks.
Tech luminary Marc Andreessen recently mused, “The only way civilization gets moved forward is when people do something new because civilization as a whole does not do new things. Groups of people do not do new things; these things don’t happen automatically. The only way civilization will change is because one of these people stands up and says no, I’m going to do something different than what everybody else has ever done before. Progress like this is actually how it happens. Sometimes they get lionized or rewarded; sometimes they get crucified.”
Understanding how blockchain technology is trying to revolutionize the world helps people understand the inevitable volatility in the market better and focus on the fundamentals rather than the prices. This is how to sustain enthusiasm for the space in the depths of bear markets.
One such example was last week’s interview between the Arbitrum community and Paribus, where Wilson, our COO, and Simon, our CTO, explained how we’re leveraging technology to revolutionize the world of finance. In particular, we’re using both artificial intelligence and machine learning algorithms to automate the collateralization of NFTs.
As Wilson described, “We’ll have NFT collateralized loans that will act in a systematic way. It’s not peer-to-peer; it’s based on a pool, and basically, this acts as a way to give a much quicker loan-to-value ratio because we use AI algorithms that will model the particular collection and give a very accurate price for any particular NFT. The speed at which you can actually take a loan out will be far quicker and run in a decentralized way.”
Simon concurred, adding, “We want to make NFT collateralized loans, as well as collateralized loans from LP tokens, like Uniswap and other decentralized exchanges, more accessible to the broader community.”
Decentralization and accessibility are central to our vision for Paribus. This is especially important regarding the future tokenization of Real World Assets (RWAs).
Wilson explained, “We’ve seen the NFT space grow and change over the last couple of years, and I think the traditional PFP type of NFTs had such a huge boom, but there wasn’t so much stability and added value that was underneath the actual JPEG. While they have incredible communities and great activities, we see the future of the NFT space going to RWAs. So this is where pretty much anything technically could be tokenized and issued as an NFT, which could then be taken to our platform and used to create a loan.”
“To add to that,” Simon said, “what I think of as the best use case for RWAs and to collateralize them will be the tokenization of real estate. I think that’s always something that’s very important. Similar to going to your bank and putting up your house as collateral and borrowing against it. I mean, I would say we are very close to that. I want to see people being able to collateralize their house, put it up, and borrow against it if they have a need for cash. You know, all the things that traditional banks would do. I just want to see this decentralized, in the best way, with everyone getting the best rates they desire.”
While the current slow grind of the bear market still has a long way to go, especially given the global macroeconomic headwinds, it’s inspiring to look to the future of the technology everyone in Web3 is developing. In the short term, there’s still lots of FUD to wade through, but in the long term, the outlook is far more optimistic than the media portrays.
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