Institutions can now use DEFI without transferring collateral from an authorized custodian.
Chain Link has launched a new system called CUSTODYSYNC.
Its goal is to solve one of the biggest problems of institutional DeFis.
Many regulated institutions want access to online lending, but they don't want valuable collateral sitting directly inside DeFi smart contracts.
CustodySync allows the underlying asset to remain with a qualified custodian while the onchain representation of this collateral is used within the lending markets.
Anchorage Digital Bank is the official launch partner.
A Proof of Reserve chain link publishes custodial balances on the network, while Transferable Acceptance Tokens represent the collateral within the lending protocol.
Price feeds keep the onchain position in sync with the value of the assets, and liquidation can be coordinated with a collateral agent appointed by a custodian.
Chainlink estimates roughly $700 billion in digital assets are already in custodians around the world.
Connecting this capital to DeFi without forcing institutions to abandon their custody requirements could open up a very different lending market.
The property remains in institutional custody.
Liquidity comes from onchain funding.