The Dawn of the NAVcoin: Bridging the Real World Economy with Decentralized Finance
The Need for a New Era of Finance
With failing economies, nation states around the globe are experiencing tremendous pain. Skyrocketing inflation, sovereign debt spirals, and rising interest rates are devaluing the average person’s purchasing power. Restrictive regulatory policies and unstable international credit markets stunt the growth of developing economies.
As a result, the average consumer not only lacks access to safe and effective financial services like savings and investment accounts, but finds themselves unable to escape their poor quality local currencies. Take for example consumer price inflation hovering at 20.1% in Nigeria, 27.1% in Pakistan, and 98.6% in Argentina, per the IMF. Economic instability at such a scale has pushed countless individuals to the fringes, making basic necessities — let alone financial independence — a distant dream. Beholden to special interests, Traditional Finance (“TradFi”) has failed to serve ordinary people around the world.
It is unsurprising, then, that emerging markets like Nigeria’s, Pakistan’s, and Argentina’s are dominating the Global Crypto Adoption Index. The willingness of the people of these countries to overcome the technical learning curve of setting up, funding, and using crypto wallets — despite the security, volatility, and regulatory risks — demonstrates the palpable economic pain.
And yet, while an estimated 460 million Bitcoin addresses have been created, less than 363,000 Ethereum addresses hold Uniswap’s UNI token, which is one of DeFi’s greatest successes. This illustrates how DeFi’s complexity renders it absent of trickle-down adoption from simpler interfaces like Bitcoin wallets such as Coinbase’s. In its current form, DeFi is failing to capture the demand that developing nations’ crypto adoption is signaling, leaving billions financially marginalized.
More Harm Than Good? How Today’s Crypto Ecosystem Fails To Serve Those In Need
Indeed, Decentralized Finance (“DeFi”) was supposed to be the solution, yet it harbors a host of vulnerabilities. Back in the real world, consumption-backed ‘real’ economies develop before a second financial economy develops on top. First trade, then trade-finance. First houses, then mortgages. DeFi has reversed this process. Lacking connection to any real economy, DeFi has become a circular economy of derivatives built on financial speculation and fraud: Party A lends to Party B, Party B borrows on margin to trade for Party C’s assets, and so forth.
It is a dizzying, unproductive, and often financially ruinous endeavor for those courageous (or desperate) enough to embark. While these money games may attract demand, they are driven by human psychology as opposed to the real, fundamentals-driven growth that will move the broader DeFi and crypto ecosystem forward.
To escape the violently speculative cycles of DeFi’s underdeveloped ecosystem, on-chain activity needs to be built on top of and connected to real, sustained and productive consumption, which only happens in the real world.
On-chain protocol and project treasuries underscore this need. Having essentially lost their function as sources of stability and durability, these on-chain treasuries present sources of massive vulnerability; 75% of DeFi project treasuries are held in their own token, and are frequently wiped out in correlation to Bitcoin’s volatility as a consequence. In total, crypto’s market capitalization shed ~$2.25 trillion of value (approx. -75%) between its high in November 2021 and low in June 2022, per data from TradingView.
Through no fault of their own, countless years of DAOs’ and other protocols’ innovations have been lost after being dragged down by the systemic vulnerability of crypto’s speculative markets. While both DeFi innovators and developing nations’ citizens continue to demonstrate desperate need for these crypto solutions, the existing landscape hardly provides safe refuge.
As an alternative to Bitcoin-correlated assets, so-called “stablecoins”, typically based on centralized fiat currencies like the U.S. dollar, provide little refuge in this turbulent ecosystem. The foundational value that stablecoins are supposed to provide is continually eroded by fiat currency inflation. Further, exacerbated by their concentration in a handful of U.S. dollar-pegged tokens, today’s stablecoins bear unpriced risks of value loss resulting from unquantifiable vulnerabilities to their issuing entities, such as the regulatory whims of the United States’ SEC. Can a truly resilient and decentralized financial system arise whilst underpinned by such a speculative, risk-laden, and paradoxically centralized blockchain environment?
The answer is no. Without harnessing itself to the resilience of real-world economic value in a decentralized manner, the long-awaited vision for decentralized finance will never be realized. By definition, the stable assets underpinning the entire decentralized finance ecosystem must themselves be decentralized.
For proof, look no further than crypto’s repeated eye-watering failures. In 2022 alone, the crypto ecosystem — not just DeFi — saw some $60+ billion lost in Terra’s (LUNA) collapse, $8+ billion in FTX’s fraud, and ~$5 billion in Celsius Network’s implosion. The list goes on with stories like BlockFi’s bankruptcy, Hex’s celebrity-infused alleged securities fraud and pilfering, and Three Arrows Capital’s ~$10 billion bankruptcy. Whether resulting from deliberate fraud, mismanagement, or both, each of these cases shares one thing in common: vulnerability to crypto’s speculative volatility, rooted in the ecosystem’s lack of diversified, stable and productivity based economic growth.
To achieve a stable, innovative, and financially inclusive future that circumvents these risk-fraught, centralized, and speculative assets and entities, TradFi must be integrated into the blockchain so that DeFi’s growth is driven by real economic activity and consumption.
Introducing Elbow: A New Architecture for a Globally Redefined Financial System
Adding a Dose of Reality to the Future of Finance
Elbow binds real-world asset values to blockchain tokens. Tokens minted via Elbow pools mirror the value and behavior of their tangible asset counterparts, ensuring that off-chain value is synchronized to globally-accessible on-chain “Elbow Tokens”. Elbow Tokens represent the first of its kind “NAVcoin” category, a new type of blockchain tokens that track the Net Asset Value of real-world funds.
With the introduction of Elbow Asset pools, DeFi stability will no longer rest on the shaky premise of a singular fiat currency. Instead, Elbow Tokens anchor DeFi to real-world economic growth, replacing “stablecoins” with a tangible, sustainable foundation for constructing the future of finance on the blockchain. Through NAVcoin Tokens, DAOs, protocols, and financially underserved peoples of the world finally gain access to diversified, inflation-resistant, productive, and truly decentralized stable assets, accessible to all.
Elbow is the foundational technology for realizing the long-awaited vision for the future of finance. Welcome to the NAVcoin era.
How Elbow Works
Elbow creates registered, legal wrappers around real-world assets (“RWAs”) to mint Elbow Tokens on the blockchain, complying with local securities laws as applicable. The RWAs are made available on-chain via pools, and are professionally managed by proven asset managers distributed across the globe.
Each pool is tokenized to create its own unique token — a NAVcoin Elbow Token wrapped around the underlying asset, with independent reporting on asset value, performance, and risk evaluations. Through combined institutional expertise and smart contract innovation, Elbow opens up a horizon of uncharted economic opportunities for companies and individuals alike.
Elbow’s structure allows Elbow’s partnering asset managers to offer users a direct avenue for investment into their real-world funds. Here’s how it all comes together: Special Purpose Vehicles (SPVs) act as the connectors between the blockchain and the real world. They tie Elbow’s on-chain capital pools directly to the assets and funds managed by partnered asset managers, with each pool having its unique representative token. If the SPV’s net asset value (NAV) grows 1%, its corresponding pool token’s value does, too.
Additionally, pool tokens grant holders legal recourse to their SPV’s underlying assets, giving true ownership of their RWA investments. In other words, Elbow’s non-custodial platform and unique SPV framework ensures that users are 100% in control of their assets, even if Elbow were to hypothetically close down as a business.
This framework enables investors to explore, review, and invest directly in RWA funds from a continually decentralizing ecosystem of asset management partners around the globe. By providing an investable alternative to holding local currencies and an escape from the uncertain status quo of stablecoins, Elbow’s NAVcoin Asset Tokens are a new positive-sum economy for everyone involved.
Eclipsing Traditional Stablecoins — The Elbow Dollar As The World’s First Decentralized NAVcoin
In addition to Elbow Tokens’ compounding RWA-backed value, Elbow presents an even more direct solution to the shortcomings of today’s stablecoin status quo: “Elbow Dollar’’ (ElbowUSD), the first of its kind decentralized NAVcoin. Elbow Dollar is automatically minted with Elbow pool tokens, aggregating value from a blend of Elbow’s Asset Pools and their underlying assets. This makes Elbow Dollar a way to gain exposure to the value of the underlying assets whilst benefiting from maximum liquidity. ElbowUSD is truly decentralized, fiat-agnostic, and naturally yield-bearing, unlike Tether (USDT) or USD Coin (USDC).
Backed by a broad basket of independently managed RWAs, including registered securities, across a distributed range of jurisdictions, Elbow USD represents a hallmark moment, ushering in NAVcoins; the entirely new category of financial instrument that will change global economics.
By connecting genuinely valuable real-world growth opportunities to the innovative and globally accessible DeFi ecosystem, the long-awaited future of finance will finally begin to be realized. Elbow’s geographically diverse NAVcoin provides escape from the vulnerabilities of weakening, centrally-controlled fiat currencies and volatile, speculative crypto markets for individuals in developing nations and DeFi innovators alike. Providing safe, valuable, and sustainable inclusion for these financially marginalized groups will catalyze a more harmonious global economy.
Welcome to The Financial Renaissance with Elbow and NAVcoin.
The Urgency of Now
The future of finance is not on the horizon; it’s here, now. With global trends pushing for DeFi adoption, traditional financial institutions like BlackRock and Fidelity pushing for spot ETFs in the wake of Grayscale’s victory against the SEC, and the rising adoption rates of blockchain-based financial solutions, the urgency of adapting and integrating has never been more apparent.
Elbow is actively participating in shaping this emerging financial frontier. Our ethos of financially empowering individuals globally is grounded in innovation, and begins with a commitment to creating tangible, positive impacts on our institutional partners’ performance.
Join the Movement
We invite you to connect with us, whether it’s through an exploratory conversation, attending a webinar, or accessing our educational resources. Together, we can shape the financial frontier and create a world where finance is seamless for all.
At Elbow, we are more than just a bridge between TradFi and DeFi; we are a joint enabling a critical movement. A movement towards a future where finance is efficient, secure, accessible, and relentlessly innovative. Join us in shaping this future.
Follow us at: @elbowfinance on X (Formerly known as Twitter)
Join the waiting list at: elbow.io
