12h.finance

12h.finance is a new protocol designed to bridge the gap between traditional finance and decentralized finance (DeFi). Our project focuses on the securitization and tokenization of Real World Assets (RWA), enabling users to bring their traditional financial instruments—such as stocks, bonds, and ETFs—into the crypto ecosystem. These assets can then be used as collateral for crypto loans.

How It Works:

1.	Tokenization of Assets: Users can tokenize their traditional financial instruments. This process involves creating digital tokens that represent ownership of these assets.
2.	Escrow Account: The initial securities (stocks, bonds, ETFs) are securely stored in an escrow account. This ensures that the underlying assets are safe and verifiable.
3.	Collateral for Crypto Loans: Once tokenized, these digital assets can be used as collateral for obtaining crypto loans. This process injects new capital from traditional finance into the crypto landscape.

Key Benefits:

1.	Introduction of New Capital: By enabling the use of traditional financial instruments as collateral, we attract new capital from the traditional finance sector into the crypto ecosystem. This increases liquidity and enhances the overall stability of the crypto market.
2.	Opportunities for Traditional Investors: Traditional investors gain new opportunities to leverage their existing portfolios. They can access the high yields and innovative financial products offered by the DeFi space without liquidating their traditional assets.

We have developed a decentralized application (dApp) built on Next.js, Dynamic.xyz, and StarkNet smart contracts. The core functionality of our platform is to mint tokenized representations of Real World Assets (RWAs), allowing users to borrow stablecoins against these assets, and burn these tokens when collateral is returned. For instance, any ETF like FXAIX can be wrapped into a tokenized asset (tFXAIX).

We have leveraged OpenZeppelin’s ERC20 smart contract as the foundation for our tokenization process. Our primary feature enables users to borrow USD stablecoins from a pool using their tokenized RWAs as collateral. This borrowing and repayment functionality is managed by a custom smart contract, designed to operate in a straightforward lending protocol manner for demonstration purposes during the hackathon. The USDC pool is supplied on the Sepolia testnet with stablecoins deployed by our team. The client-side application interacts with two key contract interfaces: one for minting the tokenized asset and another for managing the borrowing and repayment of debt. While liquidity functionality is beyond the scope of the hackathon, we have focused on showcasing the core borrowing mechanism.

For wallet interactions, we utilize the Dynamic SDK, which provides a seamless web3 login flow, allowing users to connect with ERC-4361. Our configuration is tailored to work exclusively with StarkNet. We use Dynamic to obtain the signer and provider, enabling interaction with the smart contracts. Initializing the StarkNet contract object presented some challenges, which we resolved using starknet.js, integrating provider and signer objects from Dynamic. Generic types in getters helped us overcome compatibility issues. This technical foundation showcases our commitment to bridging traditional finance with DeFi, providing new capital influx and investment opportunities through innovative tokenization and lending protocols.