VCRED (Virtual CREDit) Revolutionary flash loan based Lending platform
TL;DR Revolutionise trading one flashloan at a time! VCRED is on a mission to enable single transaction access to funds primarily through flashloans for arbitrage, Collateral swap & Self liquidation. VCRED will be launched on Avalanche first, and later on BSC and other EVM compatible chains, reducing the barrier to entry for retail traders and eventually provide a link across multiple EVM’s through issuance of ERC-20 based VCRED tokens.
VCRED aims to launch in Avalanche soon, and then swiftly launch later on Binance Smart Chain (BSC).
VCRED’s ultimate goal is to launch across all the compatible Ethereum Virtual Machine (EVM) based chains. This will made possible through the eventual release of VCRED tokens. This will be a dawn of a new era for traders as we aim to reduce barrier of entry with minimal fees and enabling cross chain arbitrage.
Flash Loans
Flash loans are an experimental new innovation to the DeFi space being launched first by Aave in May of 2020. The biggest flash loan till date was over $200 million. Flash loans are the first DeFi primitive to offer an uncollateralized loan option in DeFi history.
Flash loan allows individuals to borrow tokens from a deposit pool without collateral, as long as the tokens are returned to the pool within a single transaction. The borrower has to return the principal, pay gas and any additional fees for successful completion of a transaction.
If the loan is not repaid within one transaction block the whole transaction is reverted, and borrower has to pay the gas fees. The perfect use case for this unique innovation are Arbitrage, Collateral swap, Self-liquidation among others.
Flash loans enable retail traders to harness the volatility in cryptocurrency exchange markets without risking their capital and making “risk-free” profit.
Arbitrage
In the traditional understanding of Economics and Finance, arbitrage refers to the method of gaining an edge in the price difference between two or more markets. The trader achieves the profit through the price difference between two exchanges at which the unit is traded making the most out of inefficiency.
Arbitrage traders take advantage of minute price differences across different decentralised exchanges. So, let’s say that a DAI/USDC is trading at a 1:1 value on Uniswap, but you can buy 1 USDC with 0.99 DAI on Curve Finance.
A trader who borrows 100,000 DAI can trade them for 101,001 USDC on Curve Finance. They can then swap them back to DAI at 1:1 on Uniswap, repaying the 100,000 DAI loan and taking the 1001 DAI difference. However, in actuality, arbitrage trading comes with a certain risk of price slippage as there are fees involved. Traders generally are on a lookout for token pools with huge liquidity to trade at high values to offset the fees and minimise the risk of price slippage.
Collateral Swap basically allows users to switch the collateral they have used to take out a loan on a multi-collateral lending app. Let’s say for example that a retail trader has staked their ETH in MakerDAO to create DAI. The traders then can take out a flash loan in DAI to the same value that they have borrowed in Maker.
The traders can then repay the Maker loan through the flash loan and release their ETH. They can then trade the ETH for BAT on any DEX. They can then create more DAI on Maker through the BAT as a Collateral which will in turn pay out the flash loan.
Interest Rate Swap
In centralised finance, Interest Rate Swap (IRS) is a forward contract where one stream of future interest payment is exchanged for another based on a specified principal amount. It is a $341 Trillion market and it has arrived in DeFi. DeFi IRS has the potential of eclipsing and absorbing traditional finance.
Traders can risk losing their profits when a position is held for a long time, by hedging against this risk through IRS they can protect themselves.
A trader can get into an IRS trade to convert the floating-rate exposure / liability into a fixed rate one. By buying floating-for-fixed, the trader can eliminate the uncertainty of the floating-rate liability.
IRS is gaining popularity among traders and is being implemented by multiple AMM’s
Liquidation
Many decentralized lending protocols like MakerDAO, Compound, dYdX give unbiased access to anyone to trustlessly borrow or lend crypto assets.
Liquidations happen round the clock on undercollateralized loans. To encourage liquidation and to discourage borrowers from letting their loan in becoming undercollateralized, lending protocols set additional fees for liquidation. This fee is paid to the liquidators for keeping the system solvent. Liquidators along with keeping the system solvent, earn a good bonus for repaying the debts of the borrower
To access various liquidations and to make a winning, liquidators run bots across multiple protocols to check on pending Ethereum transactions and seek out loans that are suitable for liquidation.
A DEX can be used to instantaneously sell the liquidated collateral and the liquidator makes a guaranteed profit.
Liquidators also can profit through a smart contract which enables the liquidation and the sale of the collateral within just one transaction.
High Gas Fees
Flash loans tend to be effective when a trader can effectively complete a bunch of actions within a single transaction thus ensuring a profit. But this profit could be limited or even diminished if the trader doesn’t take into his account the high gas fees. This high gas Fees is significant in the Ethereum main-net thus creating a barrier of entry for retail traders.
Low Gas Fees Networks Alternative to MEV(Miner Extractable value)
Blockchain aggregators make a nominal reward for their services by combination of block rewards and transaction fees. Miners and block producers have wide variety of power in that particular block. They can reorganise the transactions, inserting transactions before or after other transactions and delay transactions until the next block. This Miner Extractable Value (MEV) through manipulation of blocks has been shown in recent research’s to be higher than transaction fees.
MEV powered Bots on average extract 0.34 Eth of MEV per block through arbitrage and liquidations. 18.7% of MEV extracted by bots is paid to miners through gas fees which makes up to 3.7% of all the transaction fees. The undoubted scale of bot activity on the main-net shows the need for alternative low gas fee networks.
VCRED by launching on various other EVM’s such as AVA and BSC is targeting for lower gas fees compared to the MEV bots powered main-net. VCRED thus enables traders with a low barrier of entry through reduced transaction fees.
VCRED & Avalanche
Avalanche based on the snowman consensus model is one of the most prominent platforms for creating decentralized applications (dapps). The Avalanche Platform was created by the Ava Labs as an alternative and as a competitor for the Ethereum.
One of the biggest USP for using Avalanche over Ethereum is the high transactions processed per second. Avalanche has an edge over Ethereum through its potential for scalability. Due to Ethereum’s high gas fees and limitations of TPS with just 30 TPS, Avalanche is the perfect platform to launch DeFi apps.
Another main advantage of using Avalanche is its native coin AVAX. Compared to unlimited ETH supply AVAX coin has a capped market supply of 720 million and it is specifically designed not just for Avalanche Consensus system but also as a payment portal for the network transaction fees.
It’s possible to run a full node on a simple Raspberry Pi compared to energy intensive validator nodes on other protocols. VCRED founder Vijay implemented the node on a simple raspberry pi 3b. You can read more about it here.
VCRED & BSC
VCRED is poised to to be deployed in BSC after Avalanche in the upcoming months. As BSC aligns with our founder’s vision of providing low gas fees and focus of scalability along with future integration with multiple EVM’s through VCRED tokens.
You can read more about VCRED initial prototype into BSC here
Organisation:
The main objective of VCRED is to empower traders to harness the awesome power of flash loans and to build a community driven revolutionary lending platform.
With a perfect ecosystem of scalability and ease of use for thousands of DeFi apps. VCRED is poised to take the full advantage of the system to bring its flash loans to the platform.
Vijay is the Founder of VCRED and also the Lead Developer. The idea for VCRED was born as an MVP at the Encode Club Hackathon. This prototype is now further developed for alpha release of the VCRED platform. To learn more about the VCRED MVP for Encode Club Hackathon, please click the link below.
(Link — https://www.youtube.com/watch?v=mpIqjpVUxu8 Link to encode club)
Founder Vijay leads the development and launch of VCRED platform. He has several years of experience in smart contract development, Machine learning and creating trading bots. His Repo: https://github.com/vijayengineer
VCRED team is organised as shown below:
Vijay — Lead Dev, Ilya — Backend Dev & Akarsh — Frontend Dev.
As a Lead Dev, Vijay is focused on developing and deploying Bots and Smart Contracts in Avalanche and Binance Smart Chain. Vijay is also tasked with the responsibility of designing the system architecture, tokenomics and launch of VCRED.
As a Backend Dev, Ilya will also be responsible for the development of Smart Contracts. Ilya is also creating the building blocks to run on the Avalanche Ecosystem along with developing an SDK like access structure for use of community developers.
As a Frontend Dev, Akarsh our web developer will be responsible for bringing the design assets to life and interfacing it with smart contracts on our website.
As VCRED is growing we also have a part time designer for creation of image assets and thus empowering our web interface.
Feature Objectives:
VCRED plans on updating its platform and introduce further improvements on our bots such as Collateral Swap, Interest Rate Swap and liquidation in the future.
Team Objectives:
1) We are in the initial plans for development of a Bounty Driven community audit Program.
2) As VCRED is expanding we are planning to hire Community Manager to manage the growing community needs.
Please follow us on twitter @cred_v for the latest announcements.
Investors:
CMS holdings is our lead investor, and will help launch our project across all EVM compatible chains. De-Fi capital, Avalanche and Sanctor Capital are our other investors helping us with our strategies, tokenomics in addition to investing in our project.
