Lendefi Finance — Get Undercollateralized Loans on the Binance Smart Chain
Lendefi Finance wants to make it easier for you to get access to funding. The developers behind the project wanted to create a decentralized alternative to the current lending business models. They came up with a unique peer-to-peer undercollateralized lending system that leverages top DeFi lending pools to provide lenders with more protections.
This strategy allows the platform to offer these services in a permissionless and trustless manner to its users. In comparison, the majority of peer-to-peer DeFi lending platforms in service today require full collateral to offer you services. This requirement often serves as a financial barrier to new users. Lendefi eliminates this concern in some unique ways.
For one, its open policies eliminate the red tape usually associated with taking out loans. Consequently, the platform also eliminates the costs each of these parties adds to the cost of taking out traditional loans. These cost savings are passed on directly to the users in the form of lower interest rates and rewards to lenders.
The development team has already proven to be very responsive to the needs of their users. The network launched in December 2020 on the Ethereum network. Since that time, Ethereum has experienced growing congestion which has resulted in record-high gas fees for users. In some instances, the gas fees are higher than the actual transactions.
Lendefi Goes BSC
Lendefi Finance’s developers realized that these fees were going to be a hindrance to its clients and migrated the network over to the Binance Smart Chain (BSC). BSC is the fastest-growing competitor to Ethereum at this time. The network features lower fees, higher scalability, and a variety of features only found on fourth-generation blockchains such as staking and farming.
The move has allowed Lendefi to begin development on both staking and yield farming protocols. These features are set to be released soon. Staking and farming are terms that refer to the act of locking your cryptocurrency into a smart contract in exchange for rewards.
The difference between the two strategies is that farming doesn’t have required lockup periods and staking does. Both farming and staking are ideal features to have on the platform. These services are now the standard in DeFi because they enable regular and new users to secure more stable and consistent ROIs when compared to trading.
Lendefi Finance Ecosystem
There are lenders and borrowers in the Lendefi ecosystem. The lender receives rewards in the form of variable interest rates charged to borrowers. Borrowers pay the interest and a small fee which is the difference between the interest rate the borrower pays and the lender receives.
Deflationary Fee Structure
Uniquely, these fees are used to remove the platform’s native token, LDFI, from the market via a buyback and burn mechanism. This deflationary approach to DeFi allows developers to better avoid inflation. These tokens can also be used to payout rewards for lenders, stakers, and farmers. Users can trade LDFI on PancakeSwap.
Lendefi Finance introduces two new currencies to accomplish its decentralized lending strategy. The first token is LDFI. This token holds multiple responsibilities within the network. It functions as a utility, rewards, and governance token. Notably, the first LDFI was minted in January 2021. This was the same time that the network began its migration to the BSC.
The second token, BUSD, is the currency used for borrowing and lending. This token is a stable coin pegged to the value of the USD. The decision to utilize a stable coin for lending is wise for many reasons. For one, it makes accounting much easier. Additionally, new users are better able to understand the process because everything is displayed in USD values.
One of the primary concerns that developers wanted to address was code errors. The platform has undergone multiple code audits by a variety of reputable firms. Additionally, the platform has never been successfully hacked to date.
Lendefi Finance provides lenders with some solid benefits. The network’s unique strategy of securing loans via liquidity provided on the DeFi ecosystem like PancakeSwap introduces some huge advantages. For one, they never have to worry about getting repaid on time.
These large liquidity pools provide plenty of funding to ensure your repayment is in full and never delayed. Additionally, the platform will liquefy the borrower’s collateral if the value drops below a preset percentage. In this way, Lendefi Finance removes any counter-party risk between the borrower and the lender and removes many of the financial barriers associated with these tasks.
A Community-Driven Project
Another bonus comes from the fact that Lendefi is a community-driven project. The network is simply code that functions as a decentralized autonomous organization (DAO). To participate in voting, you need to hold over 1% of the tokens in a network wallet.
You can delegate your voting rights to other members of the network. They also have the ability to delegate their voting rights to you. These users can vote on all technical upgrades and changes to the business model.
Critical changes regarding the interest rates, the addition or removal of new assets, how rewards are distributed, and other vital changes are up for community discussion. Community governance mechanisms are more popular than ever in the DeFi sector. These helpful protocols help to maintain cohesion throughout a decentralized community.
Lendefi Finance — A New Twist on Peer-to-Peer Lending
Lendefi Finance has a lot of things going for it at this time. The network is on BSC which is a big plus when you look at the astronomical gas prices on Ethereum at the moment. Additionally, lenders are sure to enjoy the added protections provided by the security mechanisms introduced by the network. For these reasons, you should expect to hear more from this team in the coming weeks as more lenders make the move to more cost-efficient networks.
The Lendefi protocol will deliver leveraged trading and secured lending for cryptocurrency markets. Utilizing an undercollateralized loan model, Lendefi facilitates a trustless relationship between lender and borrower, managed by the protocol to remove counterparty risk.