Verso Allows CeFi Institutions to Reach Clients Through DeFi

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Verso Allows CeFi Institutions to Reach Clients Through DeFi

Apr 19 2021

In brief

  • Verso finance offers regulated centralized financial institutions to connect to DeFi and offer new products to more clients.
  • Verso ecosystem consists of financial service providers, product validators, and participating financial institutions.
  • Verso is based on the Avalanche blockchain network, and it has a native token, VSO, which is received as a reward by validators.

Verso Finance is a new decentralized marketplace that aims to attract the regulated financial service industry and create a bridge between their traditional technology and DeFi.

Over the years, there has been a growing number of companies that have recognized the value and potential of advanced financial service products. These firms then started joining the financial service game, creating their own products, ecosystems, and more, in order to attract customers. Today, we have banks, insurance firms, savings companies, money lenders, and more, all of which are trying to attract customers and appear as convenient and as user-friendly as possible, all the while adding new revenue lines to non-financial firms.

While the diversity of services is generally a good thing, it does come with some very complex flaws. For example, there are plenty of distribution challenges that are standing in the way of mass adoption of financial products. Verso Finance is a company that emerged to try and solve these issues, thus helping financial institutions and their customers connect with greater ease, and provide better financial solutions to everyone.

Who is Verso Finance and What Does it Do?

Verso is a decentralized marketplace for the regulated financial service industry. Its goal is to connect the emerging DeFi sector of the crypto industry with traditional finance, by standardizing the way financial products and consumers connect.

Essentially, they already have a certain existing relationship that comes through digital wallets and bank accounts. Verso will simply amplify it by enabling traditional financial service providers to distribute microfinance products at scale.

Verso primarily offers its services to regulated financial services such as insurance firms, lenders, and alike, but its participants also include product validators and other financial industries, like digital wallets and banks.

Since it is a decentralized service, its product validators are a crucial part of the system, and they consist of financial institutions in charge of ensuring that the network protocols are being followed prior to confirming and settling transactions. Basically, they work pretty much the same job as staking nodes and Masternodes on other systems.

They offer their computing power to the network, and in return, they are rewarded via the Verso Token (VSO). The token has a variety of use cases, such as allowing access to the platform, being used for the marketing, placement, conversion of products, and more. To earn them, validators have to ensure that compliant products are made available and that those products are only displayed to appropriate consumers.

The system also relies on smart contracts, which validators ensure are set up. They then power any required transaction signing, and down the road, they might even have a role in generating new VSO tokens.

Becoming a product validator is not that complicated, but it does require a rather serious approach. Would-be validators are required to offer 1 million VSO as collateral, at their initial public sale price of $0.05, which translates to a total of $50,000 in tokens. They must also provide a certain amount of work, so it is not something that should be done lightly.

But, once they become validators, institutions stand to gain rewards for participation and offering their services. Not to mention that they also get voting rights. However, it should be noted that all voters have an equal weight of vote, which differs from governance, where more tokens in one’s possession mean that their voting power is greater.

It should also be noted that Verso is built on Avalanche blockchain, which is a new blockchain network that actually consists of multiple chains. It uses a novel proof of stake consensus mechanism which allows it to achieve over 4,500 transactions per second. As such, the system is very scalable and capable of satisfying the growing demand.

The network also allows developers to deploy blockchains that fit specific needs and have them interoperate with other blockchains, all of which serve to create a growing comprehensive ecosystem. In essence, it is a web of chains that works similarly to the internet. Imagine the internet for financial services of all kinds — that is what this project aims to become.