Anvil, founded by Tyler Spalding, has launched a decentralized finance (DeFi) protocol that reimagines letters of credit (LOCs) using Ethereum-based smart contracts. This new system allows users to lock up ether or USDC in Anvil's vault and receive a LOC without the delays and inconveniences usually associated with traditional banking methods. Spalding argues that Anvil is a step towards creating a more seamless payment system by providing transparent and sustainable liquidity. The protocol has no transaction fees, is open-source, and prioritizes community governance, distributing 60% of governance tokens to users. Anvil aims to eliminate the high costs associated with payment processing, which economists estimate could represent up to 2% of the U.S. GDP. With plans for partnerships in traditional loans and liquidity provision, Anvil aspires to bridge the gap between conventional finance and decentralized finance, effectively disintermediating banks from these processes.

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