After some quick research; a repo market is a very specialized type of bond market.    Someone sells a bond (borrows money), then buys it back for slightly more money (or repays the bond plus interest) 24 hours later.  

In the conventional financial world, this is done with government bonds.  The people who need to borrow large amounts for very short periods are almost all banks and brokerages, looking at short-term imbalances in the flow of money among themselves.  

Obviously, there are no government bonds in a cryptocurrency blockchain, so we couldn't do it that way.    It is possible (though some hard work would be involved) to make a decentralized market part of a blockchain.  

However, in the absence of a way to verify and preapprove the identity of the counterparty, it would be completely insane to buy a debt instrument such as a bond on that market.   Picture the buyer, one day later, calling the police: "somebody owes me a million coins, but I don't know who.... " Even if you do have a pretty good idea who, there is still counterparty risk which is effectively absent from repo markets in which the government is the counterparty, and counterparty risk will raise the interest rates in an unpredictable way.

Legal identities are essentially the relationship between people (or businesses) and governments.  When we need to convince people that they can use the government to enforce our agreement on us, we need to give them the legal identity that links that government to us.  So the participants in the repo market must necessarily first publicly register a legal identity and bind it to a key.

And at that point we're no longer talking about a completely decentralized service, because governments are huge pits of information all of which is external to the blockchain.