EasyFi: A Layer 2 Lending Protocol for Digital Assets

Skyrocketing gas fees and slow transaction speed on the ethereum network is not unknown to the community is a great hindrance to scalability. Lately, we have witnessed a huge growth of the DeFi ecosystem which thrives on the current incumbent network, ethereum. But congestion issues have marred this growth and there seems to be no immediate solution to the problem that can keep up with swiftly expanding DeFi demand. This calls for exploration and creation of alternate solutions, of which layer 2 networks are a promising direction.

To put into perspective the current and potential size of the DeFi market, it took almost 146 days for TVL (total value locked) in the DeFi smart contracts to reach $2 Billion from $1 Billion and only 58 days to achieve TVL of $6 Billion from $2 Billion.

Such exponential growth demands a robust and scalable infrastructure to make ends meet. Ethererum 2.0 is a promising solution with long term implications but not very promising in the short term and cannot bring about immediate changes. Therefore, the need for alternative scaling solutions that can compete, co-exist, compliment, or precede becomes apparent. Hence, moving Defi to Layer 2 blockchain networks is a natural progression.

In addition to speed and cost of transactions, we believe, DeFi needs a more user-centric approach by providing more convenience and better user experience. There’s a dearth of consumable financial products and demand is only expanding as the market is ripe for new entrants. New users are exploring beyond temporary incentives and are looking for long term engagement with enhanced security & principal protection. Hence, there is a need for innovation in order to accelerate industry adoption. In light of these burning issues and with a vision to help move the DeFi industry to its next logical progression, we have put together EasyFi which aims at achieving the ambitious goal of financial inclusion with cheaper and faster transactions at its base.

EasyFi — An Introduction

EasyFi is a universal layer 2 lending protocol for digital assets. An open and inclusive financial system built upon the most promising layer 2 solution, Matic network. We have chosen Matic Network due to its compatibility with the ethereum codebase, it’s access to the developer community of Ethereum and to harness the power of Plasma technology on which Matic is built.

Considering scalability as the first and most important DNA component of EasyFi, a Layer 2 solution, ensures faster and cheaper transactions being built into the core of the protocol which enables EasyFi to serve a large number of users and handle millions of transactions.

Our goal at EasyFi is to focus on credit aspects of the protocol, enabling various modules for borrowers to access credit easily and responsibly. Furthermore, EasyFi will also enable modules of DeFi based Insurance to protect the capital suppliers from NPAs that might occur in the future as a result of the progression of lending markets.

In Version 1 at its core, EasyFi is starting as a Fork of Compound Finance from Ethereum main chain to the Matic network enabling existing collateral-based secured loans on Layer-2. Further planned upgrades and our initial roadmap will be shared in successive blog posts.

Key Modules & Functions

EasyFi is built to push the adoption of DeFi by enabling various untouched or under-functioning features of the financial industry using blockchain technology. Some of the core functions (but not limited to), that is going to help the protocol standout and spearhead the adoption torch are as mentioned below (not in any particular sequence):

1. Secured (Collateralized) Loans: Secured or Collateralized Loans are the basic foundation of the lending industry, however, the sector rebalances as the industry progresses towards the adoption. On the same note, EasyFi will have secured or Collateralized Loans as one of the main offerings of its Interest Rate market protocol.
2. Under collateralized Loans: Under collateralized Loans are going to be one of the most important innovations of the lending industry to enable strong adoption and trust in decentralized lending. Connected with TrustScore (a decentralized rating mechanism built by Koinfox) EasyFi will enable the community to access billions in the capital that can be allocated efficiently.
3. Micro-Lending: There are billions of people in emerging economies who are working only because of daily time-bound loans of small value, however, these people are exploited by exorbitant interest rates by local financiers. Micro Loans from EasyFi are built for the very purpose of enabling people to draw upon small loans quickly for various purposes, be it their small business, medical emergency, or early salary (In case of various territories where salaries are paid in Crypto).
4. Credit Delegation: EasyFi will enable credit delegation as one of its core products for more trust-based loans where both parties either know each other or accept the level of risk by deciding upon the TrustScore of the borrower. The delegation will typically come into play for loans above a certain size, enabling financing of various needs of trusted entities via the protocol. Short term loans, Working capital financing, Invoice financing, Project financing, etc. are just some of the use cases where CD will play an important role in facilitating adoption.
5. Credit Default Swaps: CDS, which brings insurance to DeFi, are also going to be an important feature of the protocol enabling suppliers of the loans especially of a certain size, to be able to convert those loans into tradable instruments and sell them to institutional customers who are willing to cover the risk. This enables a simple form of credit insurance of various categories of loans issued on the protocol. The CDS module of the protocol will work towards creating a money market for various passive income based products backed by these trusted high guarantee loans moderated to the risk appetite of the respective users.

Conclusion

EasyFi is a universal layer 2 lending money market protocol, a fork of the compound protocol being built on Matic network, offering faster & low-cost DeFi transactions, sophisticated consumer-centric financial products for an ambitious goal of financial inclusion. EasyFi believes in a community-centric approach therefore the protocol plans to hand over complete control, in the near future, to its user’s community through innovative governance modules. With the core philosophy of value distribution to the network participants, we thrive to incentivize our users, for initial adoption, through dual farming programs in association with the Matic network.

More details on each one of the modules and protocol will follow as separate articles in weeks to come.

Until then stay tuned and follow us on twitter or join our telegram