DeFi and Web 3.0: Unleashing creativity with decentralized finance

The creator economy is one the fastest-growing industries. Decentralized technologies have a chance of unlocking its full potential. The world of finance is changing with the advent of decentralized technologies. Cryptocurrencies can be used in many ways to recreate traditional financial instruments. They are highly volatile because they can’t be backed by anything other than people’s faith in them. This means that cryptocurrencies are extremely volatile and can’t be guaranteed to get fair deals. To do so, they must be backed up with real money. This is where tokenization of real assets comes into play. This is where the tokenization of real assets comes in. While tangible assets such as buildings or gold bars are easy to understand, what about intangibles like intellectual property? The rise of the creator economy has seen intangible assets account for more than 90% of the S&P 500’s total market value. This figure is only going to increase. It is difficult to find funding in the creator economy, especially for those who are new to the field. It can be difficult to find funding in the creator economy, especially for new entrepreneurs. Many creative industries are being driven in large part by the advent of the digital revolution. They are innovative not only in what they do, but also in how they do so. One reason is that investors and banks tend to be conservative. They are used to certainty and won’t be impressed by an entrepreneur who believes that a completely new and untested idea, whether it be a design, a tool for software, or a fashion idea, will succeed commercially. Banks want collateral to secure loans, but many creative businesses don’t have any capital assets. However, creative industry specialists may recognize the genius of an entrepreneur. In return for their investment, they may want to have some ownership and control over the idea’s development and marketing. This may not be acceptable to creative entrepreneurs who prefer debt-finance in form of a loan over equity finance in form of control and ownership of the work. Jane decides to make their side project a full-time job with the encouragement of family and friends. Jane’s funds begin to shrink and Jane considers full-time employment again. This happens a few months later. This is a common situation for budding creators. However, Jane’s progress could be evaluated by a decentralized platform that collects the expertise of others in the field to give the unfinished creation a valuation based on the intrinsic value. This intrinsic value is used to calculate the collateralization value, the amount of the loan that can be issued. Jane can use the loan to pay for whatever they want. In this case, it is to help them financially while they work on the game’s development. A small loan can also be granted to newcomers, with or without collateral. Jane does not have a project, ready-made, or part-made creation. However, they have the opportunity to receive initial financing as a newcomer. Because the loan is unsecured, the amount will be lower and the loan is backed by the segment-decentralized autonomous organization (DAO), and budgets originating in its ecosystem fund. Jane’s credit rating will be improved if the loans are paid on time. Jane can apply for another loan if the collateralization factor is lower. Jane can then borrow more money if they default on their loan. Any collateralized assets will be assumed by the platform and can be sold to recoup funds via smart liquidation agreements. Jane cannot collateralize anything if the platform realizes the default risk and covers it. The next tranche of loans can be issued with iteratively better terms and conditions as long as the creator’s credit history remains solid. Credit history is an integral part of the creator’s reputation. Shkor stated, “The whole purpose of Web 3.0 was to enable a decentralized creator economicsnd all the tech to do this already exists.” He continued, “We just have to foster adoption of these technologies within real industries, in creative industry for the assets created by creators.” It will not only increase liquidity of the creator economy assets, it will also open a flow of capital to creators.” The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Alexandra Luzan is a Ph.D. student researching the connection between new technologies and art at Ca’ Foscari University in Venice. Alexandra has been organizing events and tech conferences in Europe for over a decade. She is equally interested the relationship between blockchain tech, art.

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