> For the complete documentation index, see [llms.txt](https://docs.radao.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.radao.org/start-here/reason-why.md).
# Reason why
### What problem is Radao solving?
Blockchain enables exchanges without intermediaries and without the need to trust the other party. This is quite the opposite of traditional finance, which, depending on the nature of the exchange, can involve numerous intermediaries at every stage and contracts establishing duties and responsibilities without, however, guaranteeing compliance with them.\
\
Each intermediary chooses its own interpretation of the regulation through its compliance policy and will add its costs, including its margin, which is often only legitimized by its operating license.
**For the investors, the penalty is threefold:**
* longer transactions,
* more expensive,
* more costly in administrative effort.
**For the platforms:**
* a long and costly need for regulation,
* a permanent operating risk,
* a limited source of financing,
* a high cost of entering into relationships with customers.
### Expending supply
In the decentralized environment where money (stablecoin) and crypto-asset-focused markets (DEX and loans) already exist, Radao is participate to add real-world assets tokens compatible with DeFi existing ecosystem.
### Radao versus TradFi main services around securities assets
| What | TradFi | Radao |
| ------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Clearing and settling payments** | carried out by financial institutions like payment systems, deposit accounts, e-money, cards, central counterparties (=[💰](https://emojiterra.com/fr/sac-plein-dargent/) fees) | decentralized, immutable smartcontract, priced by an on-chain oracle, with transparent network and pool fees |
| **Raising or pooling of funds** | carried out by stock exchanges for stocks, bonds, mutual funds, exchange-traded funds (ETFs) for large companies and private or fundraiser for others; (= [💰](https://emojiterra.com/fr/sac-plein-dargent/) fees) | decentralized, immutable smartcontract, priced by an on-chain oracle, with transparent network and pool fees |
| **Transfer economic resources though time and space** | Loans, mortgages, pension funds, mutual funds, etc. (= [💰](https://emojiterra.com/fr/sac-plein-dargent/) fees) | decentralized, immutable smartcontract, priced by an on-chain oracle, with transparent network and pool fees |
| **Manage uncertainty and control risk** | Loans, insurance contracts, derivatives, hedging strategies (= [💰](https://emojiterra.com/fr/sac-plein-dargent/) fees) | decentralized, immutable smartcontract, priced by an on-chain oracle, with transparent network and pool fees |
| **Provide price information to coordinate decentralised decision making** | Exchanges, trading activities, derivatives (= [💰](https://emojiterra.com/fr/sac-plein-dargent/) fees) | decentralized, immutable smartcontract, priced by an on-chain oracle, with transparent network and pool fees |
| **Deal with incentive problems** | Risk management, repeated interactions with the same known counterparties (= [💰](https://emojiterra.com/fr/sac-plein-dargent/) fees) | decentralized, immutable smartcontract, priced by an on-chain oracle, with transparent network and pool fees
+ identified issuer address known by investors (reputation)
|
| **Crossborder** | Difficult, new intermediaries and legal structures (= [💰](https://emojiterra.com/fr/sac-plein-dargent/) fees) | decentralized, immutable smartcontract, priced by an on-chain oracle, with transparent network and pool fees |
#### *based on* [*https://papers.ssrn.com/sol3/papers.cfm?abstract\_id=4325095*](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4325095)
### Risk comparison between Radao and TradFi
| What | TradFi | Radao |
| --------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Clearing and settling payments to facilitate trade** | systemic externalities. | - no risk: clearing is instantaneous,
- risk: currency received as payment carries a risk (USDT, USDC, etc.)
|
| **Pooling of funds to undertake large- scale enterprises** | inadequate information | - risk: inadequate information,
- solution: information made available at the time of purchase proven on-chain
|
| **Transfer economic resources though time and space.** | systemic externalities managed by contract & third parties under local regulation | - risk: systemic externalities,
- solution: decentralized & immutable over-collateralisation on-chain
|
| **Manage uncertainty and control risk; Provide price information to coordinate decentralised decision making; Deal with incentive problems.** | inadequate information | - risk: inadequate information
- solution: smart contract allow transparent market + IPFS allow proof of information at the time of transaction
|
### What new opportunities does Radao offer?
#### Investors in equities and bonds can find new backers, liquidity providers new sources of earnings
* **Lower costs = easier gains:**
* limited market access costs,
* crypto capital gains generally not taxable,
* DeFi protocol fees much lower than centralized investment platforms (e.g. [0.01%-0.30% Uniswap pool](https://docs.uniswap.org/concepts/protocol/fees) versus shadow fees [on the market where the stock is traded](https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/nasdaq-equity-7#section_112_fee_waivers), local taxes like[Tobin tax](https://en.wikipedia.org/wiki/Tobin_tax), brokers [payment for order flow](https://en.wikipedia.org/wiki/Payment_for_order_flow), etc.).
* **New earning opportunities:**
* use securities underlying for a crypto-loan,
* receive RAD tokens linked to usage,
* and anything else the DeFi community can come up with using ART tokens...
#### Centralized exchanges will be able to list tokens backed by equities and bonds
* new token assets class,
* liquidity of their Spot is completed by that of the real markets when the underlying asset is itself listed in the real world.
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