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IOUs on the Blockchain: How Debt Instruments Found Their Way Into DeFi
['Michelle Dg']
Blockonomi
Stablecoins are the most common crypto IOUs.
For actively traded positions, exchange IOUs are essentially unavoidable.
For exchange IOUs, regulatory oversight and insurance create the primary quality distinction.
A bank deposit IOU in the US is backstopped by $250,000 FDIC insurance, mandatory capital requirements, and central bank lender-of-last-resort access.
DeFi introduces a third tier: protocol IOUs that eliminate the single-custodian failure mode while introducing smart contract risk.