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Verso Finance connects DeFi & CeFi into a new Hybrid Business Model

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The modern financial industry is vast. It is filled with all kinds of services, and it even got its decentralized version, thanks to the emerging DeFi sector that started becoming extremely popular in mid-2020, and it only kept growing since then. However, despite its size and variety of services, the modern financial industry is extremely poorly interconnected.

In order for these services to interact with one another, they have to use third parties, which is fine in some cases, but can be very risky in others, while it always remains expensive and dependent on too many factors to ever be considered reliable, let alone convenient.

Since these massive industries can barely talk to each other even though intermediaries, they cannot tap many massive markets that have emerged simply because they can’t access them. For example, take the insurance industry, which has a massive number of small insurance users that it cannot access. Another example is wallet providers, who cannot integrate with insurance providers. Even DeFi products are not at the top of their game. They may offer high rewards, but their UI and mechanisms are too complex for anyone who doesn’t have a deep understanding of these technologies.

These are the problems that Verso Finance wishes to solve by building a bridge that will finally and thoroughly connect centralized and decentralized financial services.

What is Verso Finance and How Does it Work?

Verso finance is a decentralized marketplace for the regulated financial service industry. It grants financial service providers access to markets that were previously considered unreachable due to a number of limitations. Meanwhile, consumers receive access to a variety of new financial product offerings, all via a single e-wallet of their choice.

All of this may sound fairly complicated, but in reality, it is really quite simple when you break it down. For example, let’s say that some financial institution, such as a bank, creates a new service offering, like microloan. Its goal is to offer it to users that match certain criteria, be that age, income, location, or otherwise.

The bank would define the criteria of the campaign, and launch it on the Verso network. The network will then use the input factors of the campaign to calculate the price for the placement of the product inside its ecosystem. The product gets validated, and the bank that created it pre-funds the product pool with, let’s say, USDC.

Meanwhile, a wallet provider that is also tied to the Verso network logs into it, sees the verified product, and offers it to its user base that fits the campaign’s requirements. Once someone decides to try it out, the wallet provider will send the customer info to the bank. The bank checks the data, approves the use of the product — the loan in this case — and the loan amount is settled in USDC, from the product pool to the wallet provider, who then distributes it.

This all goes through the smart contract, of course, and once the loan period expires, the contract invokes a debit request to the wallet provider. That is one practical example of how the solution would work, but there is so much more that can be done with this network. It offers to open up countless new opportunities, despite the fact that it is not involved in the loan or the deal that took place between the bank and the consumer. Its only purpose was to connect the involved parties and provide smart contracts that are being used.

It is a new form of a web where all existing solutions can work together to provide any type of service to any user, all in a decentralized, transparent, and safe way. Of course, Verso also has a role in ensuring that the offered products are only displayed to consumers who fit the eligibility criteria. It is similar to targeted advertising, but your information remains safe and is not given to just anyone — only the institutions that are relevant to your needs and wants.

This has been a rough overview of what the project can do, and keep in mind that it is only a single example, with a lot more being on the table, and the development still in early stages. Once it matures and evolves, it may reach a completely different level of offering user-friendly, accessible financial services to people globally.

Disclaimer: This is a paid post and should not be treated as news/advice.


With Masters in Mass communication and journalism, Anjali's interests lie in blockchain technology adoption across emerging economies.
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