BarnBridge Live

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What is BarnBridge?
BarnBridge, founded in 2019, is a protocol for tokenizing risks. It was launched in September 2020. BarnBridge is a sort of decentralized finance (DeFi) lego for creating tradeable tokens that expose a consumer to market volatility. As of March 2021, the platform is still in an early stage of launch.

To learn more about this project, check out our deep dive of Quant.

BarnBridge is a project that expands the functionality of DeFi to make it more flexible and efficient. By tokenizing market fluctuations and exposure to risks, it can reduce volatility for conservative investors or increase it for daytraders. BarnBridge enables traditional risk management tools and fixed income instruments on the DeFi market. The main focus is dividing cryptocurrency risks into tranches so market participants, depending on their risk profile, can invest in different products or assets.

Sustainable DeFi platforms like Compound (COMP) and Aave (AAVE) provide over 5% annual percentage yield (APY) on some assets. With profitability optimizers like yEarn, APY can grow to over 10%. The drawback of these DeFi platforms is that they don’t offer fixed income; additionally, adding cryptocurrencies to a portfolio means taking on significant risks as cryptocurrency assets are highly volatile.

BarnBridge’s advantage is that it can aggregate yields with fixed income and flatten them to improve the efficiency of the system. This helps make the entry into the crypto industry more personalized and predictable for consumers, opening it up to a wider audience. From the standpoint of traditional finance, BarnBridge can be used to improve the effectiveness of stock trading.

BarnBridge creates tokenized derivatives based on market fluctuations. Examples of underlying markets include rates of return, prices, market prediction odds, default rates on mortgages and others. These derivative tokens are divided into high, medium and low risk/reward categories. BarnBridge is a cross-platform risk tokenization protocol with tranches of fixed income and volatility.

BarnBridge also supports SMART Alpha Bonds that can be used to tokenize price risks. They can expose users to large, medium, or low price fluctuations. Smart Alpha Bonds on Ethereum can be used as derivatives to hedge against any ERC-20 token price fluctuations.

BarnBridge’s principal competitors are other DeFi risk hedging platforms, such as the options trading platforms Hegic (HEGIC) and Opyn.

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