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Today we have announced our fist foray into the DeFi space for security tokens with the integration of @centrifuge protocol Tinkale, here is an article with what you need to consider when integrating DeFi with security tokens. TL;DR thread below 
1/14 https://medium.com/securitize/defi-and-security-tokens-balancing-compliance-with-new-financial-innovations-330894caeaa2
1/14 https://medium.com/securitize/defi-and-security-tokens-balancing-compliance-with-new-financial-innovations-330894caeaa2
DeFi is a very exciting innovation for security tokens since it helps fulfill the promise of making digital securities issued as tokens on a public blockchain more useful than other traditional ways to record book entry securities thanks to composability and programability 2/14
DeFi protocols provide functionality that exists in capital markets (borrowing/lending, market making) in an automated way but DeFi protocols are designed for cryptocurrencies and utility tokens and therefore not suitable for tokens that represent securities, let's fix that! 3/14
Securities are regulated assets and have several control mechanisms that need to be implemented when using them in DeFi protocols which adds some degree of centralization while keeping other things decentralized, we call this HiFi (Hybrid Finance) as oppose to pure DeFi. 4/14
So what are the things that you need to take into account to make it work? Basically 4 things that we will analyze separately 5/14
Wallets that interact with the protocol need to be known since they will be holding securities so they need to be linked to a KYC/AMLed investor id, you can achieve this easily integrating things like Securitize ID that @centrifuge will be using 6/14 https://www.securitize.io/product/securitize-id
Then we need to control how tokens get transfer from wallet to wallet. This is easily accomplish with blockchain based protocols that use smart contracts to enforce regulatory transfer restrictions for securities like the Digital Securities protocol 7/14 https://www.securitize.io/product/compliance
Next thing is to decide what to do with the smart contract where assets are being pooled given that they will be holding securities and raises regulatory issues related to custody and control of the securities. Some regulated entities could do that. 8/14
Another requirement is to track how the ownership of the securities change over time after investors put them on a liquidity pool. Blockchain based transfer agent can track that over time as the composition of the pool changes. 9/14
Finally, what we do with receipt or LP tokens since they represent a claim to a % of the pool and therefore can be used to receive securities by anyone holding them? They need to be restricted for transfers in some way or allowed only to be used from the original wallet. 10/14
All these adds some complexity compared to the completely anonymous and permissionless world of DeFi but we think that those protocols can greatly help to add liquidity to security tokens, one of the major problems of the industry today due to the lack of marketplaces. 11/14
in subsequent posts, our head of product and the brain behind this thinking @jserna will be providing more ideas about how to deal and implement all the issues outlined above to make DeFi work for security tokens 12/14
Here you can see our announcement with @centrifuge in @CoinDesk (disclosure, I lost 20 pounds since that picture was taken, please refer to my profile pic for my current status 
) https://www.coindesk.com/securitize-tinlake-centrifuge-ethereum-based-securities-defi 13/14
) https://www.coindesk.com/securitize-tinlake-centrifuge-ethereum-based-securities-defi 13/14
And final thanks to the team at @blockchaincap @_alekslarsen @h_joshua_rivera and @wbrads for multiple discussions on the topic that helped shape our thinking. 14/14
