How is decentralized finance affecting traditional assets?

Torben Nagel recognized the potential of tokenization early on. As an investment banker, he knows the potential for optimization in the securities sector. Accordingly, he understands the advantages of tokenization, which for him lie primarily in the development of liquidity. In order for these to be developed and accepted by institutional investors, the right infrastructure is required. This includes information standards such as the well-known Bloomberg Terminal. with his company Tyreo’s Asset Universe Torben therefore wants to set up such an information service for digital assets.

In the conversation, we wanted to know what the Bloomberg terminal is, whether rising interest rates are threatening digital securities, and how much influence DeFi has on traditional assets. You can find the full interview on the BTC-ECHO Experts Podcast.

BTC-ECHO: The so-called Bloomberg Terminal costs around 24,000 euros and is therefore rather unsuitable for small investors. What’s it all about?

Torben Nagel: Michael Bloomberg has considered collecting pricing data on bonds. Since there was no competition, he structured this data and made it available to all the investment banks. This finally gave them the data they needed to make a buying decision about bonds. Bloomberg was essential to the modern capital market.

With the rise in key interest rates, “risk products” such as digital securities have to offer enormous interest rates so that buyers can still be found at all. Does that become a problem?

That’s where the banker in me comes out again: it depends. You need an overview in the market: How are financial products finally structured in the classic market? If the interest rate is too expensive, for example three percent risk-free interest rate and the cash flow model can sustain around 10 percent, that would not be enough. In the classic mezzanine area [Mezzanine-Finanzierungen stellen, in ihren rechtlichen und wirtschaftlichen Ausgestaltungen, eine Mischform zwischen Eigen- und Fremdkapital dar, Anm. d. Red.] one likes to give an equity kicker [Möglichkeit der Teilhabe am Unternehmenserfolg, Anm. d. Red.] at. And that is precisely the topic: understanding what financial products are currently gaining ground. Which ones have traction, what fits which cash flow model and what doesn’t.

What impact can the DeFi space have on the crypto world and traditional assets?

incredibles. Liquidity pools alone are incredibly exciting. As a rule of thumb, tokenization takes place from an asset volume of 10 million euros. But that’s way too small for a market maker. But if you have pools with multiple assets, you can suddenly find a market for them. It’s not trivial and there’s a bit of math behind it too, but it’s exciting. This is such a use case where I would say: Wow, DeFi is really strong. […] And then we talk about collateralization [Besicherung]automatic lending or capital investments.