According to the company's blog post, the Perimeter Protocol is designed to support various use cases for credit, including invoice factoring, salary advances, instant settlements for traders, and credit transactions for institutional investors. The Perimeter Protocol's white paper is publicly available, allowing developers to freely replicate the code and build products based on it.
This release also marks the first launch of Circle Research, a new division of the company dedicated to open-source development. This step aligns with the growing trend of integrating traditional financial instruments, such as credit, into blockchain-based applications, often referred to as the tokenization of real-world assets (RWA). A Bank of America report suggests that tokenization could revolutionize the existing financial infrastructure, creating a more efficient and transparent system. Bernstein forecasts that the market for tokenized assets could reach $5 trillion over the next five years.
Stablecoins play a key role in settlements within blockchain-based credit markets. Circle aims to enhance the functionality of its USDC stablecoin, valued at $26 billion, and the European token EURC, supporting tokenization efforts and the development of decentralized finance (DeFi) credit platforms. The company acknowledges significant barriers for new participants in these markets, emphasizing the need for secure lending through established standards and underwriting.
The Perimeter Protocol has already been utilized by the institutional DeFi platform OpenTrade, which developed the first offering in the form of a tokenized pool of U.S. Treasury obligations using this protocol.