🏭Reason why
Why we do things.
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 high cost of entering into relationships with customers.
Blockchain based Real world assets (RWA) are by definition borderless but regulated by local law in case of security tokens, which can have a significant impact on their liquidity, taxation and value. We can, however, classify them into global investment categories that have similar business models throughout the world, albeit in very different forms: equities, bonds (debt), money-market investments, commodities, currencies and real estate.
Bitcoin decentralized money is a significant advance, enabling everyone to hold their money without intermediaries. The opening, crediting or debiting of an account cannot be prevented by any criterion other than the state of the balance. Secure exchanges are made possible without contact or trust. Assets in circulation can only be created by an algorithm known to all.
Decentralized lending and borrowing (DeFi) is also a major advance in the regaining of control by value holders over traditional financial players (TradFi), made possible by the distributed Turing machines initiated by Ethereum. Pooling via pools (Uniswap, Aave) or peer-to-peer (Morpho) enables greater capital efficiency and better rate transparency.
Radao provides a flexible solution for equity and bond investors who want to benefit from the advances in DeFi. With self-ownership of securities backed ART tokens, a complete ecosystem needs to be rethought, in which the numerous intermediaries are replaced by applications at the service of customers, in compliance with regulations.
Radao versus TradFi main services around securities
| What | TradFi | Radao |
|---|---|---|
Clearing and settling payments | carried out by financial institutions like payment systems, deposit accounts, e-money, cards, central counterparties (=💰 fees) | smart contracts allowing decentralized on-chain (no extra fees except network) |
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; (= 💰 fees) | smart contracts allowing decentralized on-chain Initial Pool Offering mechanism (no extra fees except network & DAO) |
Transfer economic resources though time and space | Loans, mortgages, pension funds, mutual funds, etc. (= 💰 fees) | smart contracts allowing decentralized on-chain bonds secondary market (no extra fees except network & DAO) |
Manage uncertainty and control risk | Loans, insurance contracts, derivatives, hedging strategies (= 💰 fees) | smart contracts allowing collateral is in our roadmap (no extra fees except network & DAO) |
Provide price information to coordinate decentralised decision making | Exchanges, trading activities, derivatives (= 💰 fees) | smart contracts allowing decentralized on-chain bonds secondary market (no extra fees except network & DAO) |
Deal with incentive problems | Risk management, repeated interactions with the same known counterparties (= 💰 fees) | smart contracts allowing collateral is in our roadmap (no extra fees except network & DAO) + issuer address known by investors (reputation) |
Crossborder | Difficult, new intermediaries and legal structures (= 💰 fees) | native |
Risk comparison between Radao and TradFi
| What | TradFi | Radao |
|---|---|---|
Clearing and settling payments to facilitate trade | systemic externalities. |
|
Pooling of funds to undertake large- scale enterprises | inadequate information |
|
Transfer economic resources though time and space. | systemic externalities managed by contract & third parties under local regulation |
|
Manage uncertainty and control risk; Provide price information to coordinate decentralised decision making; Deal with incentive problems. | inadequate information |
|
What new opportunities does Radao offer?
Investors in equities and bonds can earn more through the Radao protocol
Lower costs = easier gains:
limited market access costs via Ramp, which enables the desired asset to be obtained on the best terms available at the time of purchase,
crypto capital gains generally not taxable locally,
DeFi liquidity markets is limited to protocol fees (e.g. 0.01%-0.30% Uniswap pool) , which are much lower than those of brokers and other local fees & taxes (on the market where the stock is traded, Tobin tax, brokers payment for order flow, etc.).
New earning opportunities:
use its securities as collateral for a loan in order to re-invest,
use the Radao ramp to receive RAD governance tokens,
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
a new asset class that is technically and legally similar to the ERC20s already listed (ETH, SOL, DOT, LINK, etc.),
liquidity of their Spot market fuelled by the Ramp to the real market.
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