The Value Of LDFI Tokens
Advantages of undercollateralized loans on blockchains.
Lending is integral to the functionality of capital markets. Without the ability to borrow, investment opportunities are restricted and market growth is adversely impacted.
Lendefi’s innovative new protocol will facilitate undercollateralized lending for digital assets and bring new investment opportunities to blockchain markets. Ownership of Lendefi’s native LDFI token represents an opportunity to participate in how lending within the protocol functions.
Lendefi was conceived in December 2020 to address the lack of undercollateralized loans within the blockchain DeFi ecosystem. Previously, lending for digital assets had been available in an overcollateralized format, but no options for undercollateralized loans existed. This gap presents a valuable opportunity that owners of LDFI tokens can capitalize upon.
The Lendefi Model
In Lendefi’s innovative protocol, borrowers deposit digital assets into a smart contract and loans are delivered to the borrower from the lending pool. The borrower can then choose to invest in a number of approved digital assets such as BTCB and CAKE. With attractive Loan to Value Ratios (LVR), the borrower can invest higher volumes than the equity they have deposited, generating a leveraged position.
Once a loan has been issued the digital assets purchased with the borrowed funds are securely held within the smart contract and interest payments are delivered to the lender on an hourly basis. When the asset is sold, the lender’s principal is returned and the remaining balance transferred to the borrower. The Lendefi protocol monitors the investment in real-time and if the value of the investment drops below a safe threshold, the protocol automatically liquidates the investment before the lender’s principal is impacted.
Lendefi represents a positive scenario for both borrowers and lenders, as it operates completely within a secure and trustless environment. Both parties enjoy the benefits of a true DeFi experience, without concerns over middlemen, red tape and counterparty risks.
The Lendefi Protocol Value Proposition
The Lendefi protocol embodies a number of key-value propositions, which facilitate the creation of undercollateralized loans for cryptocurrency markets.
Access To Capital For Crypto Assets
Compared to other assets such as real estate or corporate shareholding, crypto-assets do not enjoy access to capital markets for borrowing and lending. Access to capital markets is important for the growth of cryptocurrency markets and this is facilitated through Lendefi’s protocol.
Undercollateralized Loans
Lendefi allows users to access undercollateralized loans to purchase crypto assets. Undercollateralized loans allow borrowers to borrow more than they have deposited to create leveraged investment positions. These assets are purchased directly within the Lendefi protocol through decentralized liquidity pools, such as PancakeSwap.
Attractive Interest Rates
Lendefi allows lenders to earn an attractive rate of interest by lending digital assets through the protocol. Interest payments on loans are automatically calculated and dispersed to lenders on an hourly basis.
Completely Decentralized
Lendefi is a completely decentralized finance protocol which functions through smart contracts. This creates a highly secure, trustless and robust platform.
No Middleman
The Lendefi protocol removes the middleman from the loan equation, reducing the red tape involved with lending and borrowing. This eliminates counterparty risk between the borrower and lender, who can engage on a trustless basis.
Secured Lending
Lendefi facilitates secured lending, providing confidence to lenders in highly volatile cryptocurrency markets. Secured lending creates opportunities for traditional lenders to access higher rates of interest, without having direct exposure to market fluctuations.
Multiple Asset Support
When borrowing funds from the Lendefi protocol, borrowers can select from a variety of supported digital assets including, but not limited to BTCB and BNB. Supported assets can be added and removed from the protocol through Lendefi’s governance DAO.
The LDFI Token Value Proposition
LDFI is the native token for the Lendefi protocol. LDFI is a governance token that controls the interest rate model, inclusion of supported assets, reward distribution, changes in the protocol and other terms and conditions.
Initially, LDFI tokens will be listed on Decentralized Cryptocurrency Exchanges to provide liquidity for token holders. In the future Lendefi intends to list LDFI tokens on appropriate Centralized Cryptocurrency Exchanges.
Decentralized Governance
The Lendefi protocol will be controlled by the community of LDFI token holders. Governance will be facilitated through the voting process inherent within the Digital Autonomous Organization (DAO). This allows token holders to actively participate in the protocol’s governance and decision making.
DAO Voting
Any address holding over 1% of total LDFI tokens can create proposals for protocol changes. Those changes will then be decided upon via voting on the DAO. These voting rights will be highly desirable for participants actively engaged within the market for undercollateralized loans.
Fees
The difference between the interest rate the borrower pays and the rate the lender receives, otherwise known as the spread, will be used to purchase LDFI tokens from the market for the purpose of burning and rewards.
Token Burning
Through a process known as burning, LDFI tokens will be burnt, lowering the total and circulating supply. This will increase the value of LDFI tokens, generating further value for token holders.
Further Rewards
A variety of rewards will be approved by Lendefi’s DAO and given to encourage the protocol’s growth and create additional value for token holders.
The Lendefi Roadmap
Lendefi has an aggressive roadmap towards the launch of the protocol. After the recent appointment of Blockchain Labs Asia as lead developers, development has been rapid and regular announcements are being made to the community through our GitBook.
The timeframe for the Lendefi protocol mainnet launch will be within the next few months. Once the protocol starts serving users within cryptocurrency markets, the value proposition for LDFI tokens will change dramatically. Prior to launch holding LDFI tokens are a speculative proposition but once the protocol is active LDFI tokens represent additional inherent values. The most important being the right to suggest and vote on protocol operation through Lendefi’s DAO.
Since the birth of cryptocurrency it has been impossible to borrow in an undercollateralized manner for investment in digital assets. That is about to change when Lenedfi’s innovative protocol becomes available to the public. Lendefi aims to deliver the next generation of financial services to cryptocurrency markets and redefine how these are accessed. The impacts of the Lendefi protocol will be significant for the future of digital asset markets.
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.
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