Test cases for decentralized finance (Defi) in traditional finance are likely to increase in the coming years as the new agreement tries to securitisate real-world assets, according to a new study by Standard & Poor's Worldwide Ratings, a rating agency.

In a report entitled "securitization Defi Agreement: credit risk Perspective", S & P pointed out that equity financing of real-world assets may be a key focus area for the future development of the Defi agreement. Although the area is still in its infancy, S & P outlines many of the benefits that Defi is likely to bring to securitisation, including reducing transaction costs, improving the clarity of the asset pool, reducing counterparty risk and enabling investors to pay and clear more effectively.

Investment analysts Andrew O'Neill, Alexandre Birry, Lapo Guadagnuolo and Vanessa Purwin wrote: "the initial development and design of Defi focused on applications that provide financial information services within the login password ecosystem, such as loans secured by login password assets, financial tool accounts of login password assets and password trading websites."

This initial test case is broadly out of line with China's real economy. The equity financing of RWA has become a theme in the field of Defi, and the loan agreement gives loans in the traditional way, according to the underwriting of the borrower, rather than using data encrypted assets as collateral.

However, Defi securitization is not without risk. S & P sees the laws, regulations and operational risks associated with the sale of such bonds, as well as the probability of an imbalance between currency-denominated assets and digital currency liabilities. Addressing these risks may be the difference between robust debt securitisation and areas that do not attract traditional financial interests.

S & P worldwide rating is one of the three major rating agencies on Wall Street. Although the company is scientifically studying the Defi protocol, it has not yet graded anything.

The Defi market became famous in 2020, attracting local investors for data encryption because of its higher returns and the promise of easier access to the loan market. Based on most indicators, Defi activity peaked in the third quarter of 2021, when total TVL locked on Defi software exceeded $180 billion in November.

For a long time, asset dynamic password, that is, the process of publishing security tokens that means real tradable assets, has been called a workable test case of blockchain technology. According to Ernst & Young, there is a bridge between real-world assets and their availability in a world without any intermediary data. The consulting management company feels that labeling can "provide liquidity for users who are otherwise illiquid and non-piecemeal."