November 17, 2021

Prelude to the future of finance? A major bank is raising a loan from a DeFi protocol to refinance tokenized bonds

Societe Generale

(SocGen), one of the world’s largest investment banks, is raising a loan through a subsidiary from decentralized platform MakerDAO, to refinance some tokenized bonds it holds. 

If materialized, it will be the first time a major bank borrows from decentralized finance, or DeFi protocols, which refer to programs powered by cryptocurrencies and blockchains without reliance on intermediaries. 

As DeFi protocols replace human middlemen with self-executing computer programs, they claim to be more efficient, faster and cheaper. Supporters also point to DeFi’s potential to benefit unbanked communities, as no government ID or social security number is required to use the platforms.

However, DeFi has also drawn concerns from regulators and some investors, as they worry that a loophole in the code may lead to investors losing…

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