Opportunity Costs: How Fuji’s Auto-Financing Puts DeFi users On the Best Rate (Before They Know it Exists)

A simple equation governs the world’s money markets. Those who lend money want the best return, those who borrow want the lowest price. As the era of Greenspan’s cheap money ends, and a return to normalised interest rates is at hand, people are more acutely aware than ever of the need to get the most for your money, no matter which side of the equation you are on.

Staying Interested

In traditional finance, a whole industry of financial management exists to help individuals and businesses do just that, eking out extra basis points here and there for wealth funds. Financial management is a full time job, and most money-managers underperform even in a sector where the pace of change is measured in weeks, and individuals have time to pore over the latest institutionally-issued financial reports

In DeFi, things are different. Change is measured in minutes and, sometimes, in seconds. Hyper-fluctuation of rates is the norm, with protocols shifting interest rates rapidly on a series of automated factors, exaggerated by the innate volatility of the crypto space — where new innovation can rapidly upend the status quo of the market, in some cases with violent and spectacular results.

Why DeFi Loans Power the Market

So why do lenders love DeFi so much? Well, the over-collateralisation of loans means that it’s very hard to outright lose money (except when the protocol itself goes belly up through a smart contract hack, fraud, or other black swan event). Lending through DeFi provides reliable, exceptional yield that, for much of the last three years, has utterly outstripped anything in the traditional finance sector.

And for borrowers? The ability to access speculative capital without sacrificing the underlying collateral is a godsend and was fuel for much of the mania that gripped crypto markets in 2021. Accessing capital without having to abandon token holdings meant it was easy even for average retail traders to embark upon sophisticated, capital-efficient portfolio positions and, if done right, hedge against their own portfolio without recourse to a centralised entity.

Why Experts Have a Hard Time Keeping Up

Specialist up-to-date knowledge is required to ensure you are borrowing or lending at the best rates in DeFi. What was true yesterday may not be true today. A great rate on your wETH or xDAI on Friday may be pitiful by the time you return on Monday. In a fast moving market, you must always be on, always in front of your screens, and always active. Otherwise you’re just falling behind and, occasionally, leaving yourself open for liquidations as the goalposts get moved while you’re asleep.

It’s exhausting. And difficult. And, due to the need to continually switch your money from place to place — expensive. Crypto transaction fees — especially when moving tokens cross-chain — rapidly bite into potential profits. A few bad decisions here and a few bad decisions there, and all of a sudden, despite your literal best efforts, your portfolio is going backwards, and your DeFi strategy is in tatters. What DeFi borrowers, lenders, and traders need is a way to always get the best rate — no matter which side of the equation they are on.

Automatic for the People: Auto-Refinancing with Fuji

Fuji Finance’s auto-refinancing tech is exactly that. It’s a secure baseline for DeFi participants to ensure that at least part of their portfolio is operating at maximum efficiency, even if their interest in DeFi is casual at best. The Fuji router automatically moves money in response to market fluctuations to different ERC-4626 vaults in the Fuji ecosystem. These vaults operate on multiple flagship DeFi protocols across multiple chains, and check the activities of those protocols in real-time to ensure that, if a better rate is available for a user, they are already on it before they even realise it’s available.

Advantages for DeFi Experts

Fuji also offers several advantages even for the hardcore user. Bundled transactions mean that the excessive gas costs that are associated with shifting collateral around from chain to chain through multiple different transactions are distilled down to one simple transaction through the Fuji Router, with only one gas bill to pay. Multiple actions can be performed in a single transaction, queued at the user’s discretion, drastically reducing the administrative burden required to execute a DeFi strategy as a whole.

Fuji also lets users deposit collateral on one chain and borrow on another. This is perfect for DeFi users who know, trust, and want to keep their collateral on a specific chain they are familiar with, but are keen to explore opportunities that may be available on another chain. Or, it may be as simple as a yield opportunity that doesn’t exist on one chain, but exists on another. Fuji doesn’t restrict users who are taking advantage of its auto-refinancing tech, and helps them not miss out on the latest and greatest yields the market has to offer.

Climb the Money Mountain with Fuji

Active portfolio management is expensive, time-consuming, and littered with human error. Even active, talented managers can’t synthesise the market effectively all of the time, and aren’t always getting market leading interest rates. Fuji lets users climb that mountain and get the best interest rate both as borrowers and lenders. Opportunity costs — in terms of gas, in terms of time, and terms of knowledge, are saved. Using Fuji, DeFi users can always get the best rate for their collateral, letting them climb to the DeFi summit and soar above the clouds.