The fast-evolving decentralized finance space has been getting a lot of attention from industry participants as well as mainstream media. Even though many crypto experts believe that DeFi has a bright future, the nascent sector faces many systemic problems such as not being able to resolve disputes transparently.
DeFi investors’ assets are most likely gone forever if they perform a transaction by mistake or unintentionally. That’s why we need effective dispute resolution and proper legal protection so that major institutions gain more confidence in the DeFi space.
For most traders, DeFi is seen as an industry segment that allows them to earn high yields passively. These alternatives have become even more appealing due to zero or even negative interest rates being offered by global banks following the COVID outbreak.
With a sensible allocation to high-performing DeFi assets, users can participate in a complete financial system. They’re able to lend money, borrow funds, engage with various staking protocols, participate in yield farming, and also earn digitally scarce or rare NFTs.
Although these are all great opportunities, there are certain issues that must be addressed before DeFi can truly go mainstream and appeal to more sophisticated institutional investors.
Bringing Unparalleled Assurance to Permissionless Blockchains
The team at Astra Protocol say that they aim to bring “unparalleled” assurance to public or permissionless blockchain networks.
Astra Protocol’s mission is to equip the decentralized finance (DeFi) ecosystem with a complete legal layer. They intend to remove doubt, eliminate fraudulent activities and address disputes in order to make public blockchains safer for everyone.
The Astra Protocol developers plan to unlock the future growth of the blockchain industry by providing a robust legal framework for all stakeholders.
Decentralized or non-custodial exchanges are experiencing many of the same problems that are affecting DeFi lending and borrowing protocols: There’s no guarantee that the smart contract matches the agreement that it’s supposed to fulfill. To solve this issue, Astra protocol offers an on-chain dispute resolution mechanism to bring trust as well as legal assurance to decentralized exchanges (DEXes).
The Astra team acknowledges that DeFi has become one of the most appealing, exciting and “lucrative” blockchain or DLT market segments. However, the reality is that if users send assets to the wrong wallet address or the transaction turns out to be a scam — money is most likely gone forever. In most cases, there’s no recourse and the lost funds remain unretrievable.
Providing an Assurance Layer to Connect Crypto with the Real-World
With a loosely regulated crypto space, DeFi is extremely high-risk for large corporations. According to the Astra team, the industry needs an assurance layer that can reliably connect the crypto space and the real world to offer trust and peace of mind.
The ASTRA solution is described as a “revolutionary” legal layer that can connect to any existing platform, while ensuring all assets are transferred securely to their intended recipient(s). In the event that something does go wrong, users are able to resolve the issue with ASTRA and can restore their funds “immediately.”
As explained on Astra’s official website, both parties are able to receive “unparalleled” dispute resolution capabilities by agreeing to use The Proof of Trust as their preferred platform. By programming a certain clause into their smart contract, The Proof of Trust serves as the mechanism to address all issues, such as accidental or fraudulent activity. All concerned parties and transfers are fully protected when using the Astra protocol.
Offering Effective and Affordable Dispute Resolution
The Astra team further notes that when the smart contract is signed, it’s possible for both parties to cost-effectively invoke ASTRA in case anyone is not satisfied at any stage of the transaction.
According to the Astra protocol team, the ASTR token will be of “great importance” when it comes to supporting a healthy and “fair” transactional ecosystem. As more individuals/entities start using The Proof of Trust as the go-to dispute resolution mechanism, the ASTR token may “efficiently” rank the upcoming cases in order of priority or relative importance.
As noted by the Astra team, all stakes will be visible to network participants and each stake “must be placed within a predefined timeframe.”
The Astra team points out that the DeFi market has been growing rapidly. Current estimates confirm that if this growth rate continues, then the total value locked or TVL might soon reach the $1 trillion mark, however, it can’t happen without institutional assurance from The Proof of Trust.
Making Steady Progress
As mentioned on Astra’s official website, the project’s whitepaper was published in Q1 2021. The team proceeded to finalzie strategic partnerships during the second quarter of this year.
A private and public token sale was conducted in Q3 2021 and the team continued to work on technology development.
During the final quarter of 2021, the Astra team will be developing their proof-of-concept or PoC. Next year, the Proof of Trust Alpha and Beta-Testing are scheduled to begin deployment. The team will also introduce the project’s blockchain-powered decentralized application (dApp). In addition to these deliverables, the team will aim to offer even more utility use-cases to the Proof of Trust Token.
Legal Tech for the Crypto Space
It has become quite obvious that the crypto industry needs a proper regulatory framework in order to ensure investor protection. However, the decentralized nature of most digital asset platforms including non-custodial exchanges cannot be effectively regulated by relying on the outdated regulations that apply to traditional finance.
Cryptographic assets are highly technical and far more advanced than fiat-based financial platforms. That’s why we need solutions like the Astra protocol to provide the assurances needed to safeguard investors’ assets.
Digital asset fund flows reports from European fund manager CoinShares as well as regular updates from Grayscale, among many other crypto firms, confirm that institutions are becoming quite serious about gaining more exposure to virtual currencies and even DeFi assets.
If this space is going to move forward in a sustainable manner, then it’s essential to create advanced legal tech platforms that can facilitate the execution of smart contracts between different parties in a seamless manner. Dispute resolution should be integrated into every cryptocurrency protocol and that’s exactly what the Astra protocol will be designed to provide.