Cross-chain money markets, latest attempt to bring liquidity to DeFi

To put this into perspective, a new report from Cointelegraph Consulting shows that the total value locked in DeFi jumped past $6 billion in August while in June, the TVL in DeFi was just over $1 billion, and ultimately stands at $9.4 billion at the time of writing.

While impressive, the DeFi space is still in its infancy, and many hurdles must be overcome before it enters the mainstream crypto market.

DeFi platform Kava enables individuals with digital assets to use these as collateral to receive loans.

Although the concept is very new, Kerr believes there is potential for cross-chain money markets in DeFi.

In particular, cross-chain money markets will open up liquidity by allowing top-performing assets such as BTC and XRP to participate in DeFi options.

Michael Arrington, a partner at Arrington XRP Capital - a digital asset management firm - told Cointelegraph that XRP holders have indeed been asking for DeFi products: "XRP holders will have DeFi options for the first time ever."

"Today's DeFi market suffers from fragmentation, lack of interoperability, and inefficiency of bad debt liquidation, which resulted in significant losses in MakerDAO protocol in March. Equilibrium will offer true cross-chain interoperability and will expectedly help to reach the market's full potential."

Changpeng Zhao, the CEO of the Binance cryptocurrency exchange, told Cointelegraph that while cross-chain money markets are important, these platforms do not seem to be the one factor that will lead the mainstream to embrace DeFi:."We will carefully monitor how a greater amount of chains building their respective DeFi ecosystem will impact the total locked value across DeFi as a whole. We expect that the TVL will grow in proportion to the market cap of the chain's native assets. Ultimately, there might be some synergy effects where cross-chain portability and a much broader offering will enable users to find exactly their risk-profile, exactly their service offering, exactly their UI.".

There seems to be a growing demand for cross-chain money markets in today's DeFi sector.

Gerald Votta, the director of communications at Quantum Economics - a digital asset space advisory firm - told Cointelegraph that there are thousands of subtokens for DeFi applications.