Dutch multinational ING plans to enter DeFi lending sector
In a presentation at the Singapore Fintech Festival, Annerie Vreugdenhil, ING Innovation Director, announced that the company is working on a trial of its decentralized financing protocol, or DeFi, peer-to-peer lending with the Netherlands Authority for Financial Markets. . Vreugdenhil stated the following with regard to development, as reported by Ledger Insights:
We are studying peer-to-peer lending in a DeFi type configuration. But then not on Bitcoins. What interests us is how you can possibly create peer-to-peer loans or open up lending capabilities with different types of collateral. So with different ways of doing it rather than volatile Bitcoin.
ING is a Dutch multinational financial services company with more than 1000 billion dollars in total assets under management. In a white paper released earlier this year, ING specifically mentioned the Aave loan protocol, which is built on the Ethereum (ETH) blockchain, as a recent innovation in the industry. Through smart contracts, Aave allows borrowers to deposit cryptocurrencies as collateral and take out a stable loan.
The mechanism can be used like a traditional asset lending, that is, going into debt to pay for current expenses while the investment continues to accumulate. In line with ING’s concerns regarding the use of volatile assets as collateral, Aave also allows the borrowing and lending of stable coins. At the time of writing, borrowers can earn around 3% interest per year by depositing their DAI in variable rate pools while lenders pay 4% interest per year and vice versa.
While ING praises DeFi for its borderless payments, 24/7 operations and speed of transactions, its white paper highlighted several drawbacks. In particular, since borrowing and lending protocols require collateral, they do not allow the creation of new money for initiatives such as financing of businesses and entrepreneurs.
Nevertheless, ING has taken a lot of interest in the blockchain industry in recent years. At the end of 2020, ING joined the Blockchain Education Alliance. The company also started work on digital asset custody in 2021 and discussed a number of stablecoin developments at a conference in April this year.