Babel Finance announced on Thursday that it successfully issued its first collateralized USDC note, in a move that demonstrates crypto’s potential to enter the $100 trillion global bond market.
The note is a smart contract-based global debt instrument, provided by blockchain startup FQX on Solana, the company said in a press release.
It was executed via eNote, a blockchain-based debt instrument which is recognized around the globe, and can be used for a broad variety of financing purposes.
The move, a demonstration of FQX’s proof-of-concept, provides a legal layer for decentralized financing, and shows how certain tech can increase legal certainty and optimize the loan-to-value ratio in the massively overcollateralized DeFi space.
The transaction was executed using a Fireblocks custody wallet, with the principal provided by a Swiss investment firm and secured with smart contract-based collateral denominated in SOL.
“Prolonged manual processes, limited secondary market liquidity, and mostly bilateral settlements offer a number of areas in debt markets which can be improved by blockchain and smart contracts,” said Richard Astle, head of Switzerland and Middle East, at Fireblocks.
“Through tokenization, investors are able to participate with smaller transaction sizes than traditional debt issuance, making it much more accessible to the broader market.”
For the delivery-versus-payment, as well as for the collateral management, FQX’s decentralised escrow programs were used.
The new way to issue transferrable debt will soon be available through Wallet Connect’s Solana gateway to Fireblocks using FQX’s eNote dApp.