Xend Finance Tech Overview
Xend Finance is a DeFi platform for Cooperatives and Credit Unions. The aim of Xend Finance is to improve the traditional business model for cooperatives and credit unions.
The Problem We Are Solving
Traditional Credit Unions are location dependent. This means that all members must be in a particular geographical area to be a part of a credit union. They have very low annual percentage yields. Smaller credit unions have access to a small amount of liquidity, hence they give very small loans with high-interest rates.
Xend Finance has broken down these barriers by providing a location-agnostic protocol that can be accessed from anywhere in the world, providing high annual percentage yields of up to 20%, access to global decentralized financial services such as DeFi savings, DeFi lending, and DeFi borrowing, and access to decentralized insurance to ensure the protection of deposited assets.
Credit Unions and Individuals can now easily store their money in foreign and stable digital currencies, earn interest in foreign stable currencies, and also borrow in foreign stable currencies. Access to their funds is instant and no third party is required. Using a decentralized governance process puts the community in charge of operations, thereby reducing risks and improving the viability of the project.
System Overview
Different Xend Finance Strategies
Xend Finance aggregates different lending protocols like Compound, Fulcrum, Dy/Dx, Aave to provide high APYs by leveraging Yearn Finance protocol.
Savings
Xend Finance users can perform savings actions as individuals or as groups (cooperatives or unions). The Xend Finance protocol allows users to create different savings cycles. The savings cycles are governed by different parameters such as time, max number of members, and minimum deposit per member.
Currently, the Xend Finance protocol only has support for multi-collateral DAI stable currency.
When users deposit DAI on the Xend Finance smart contract, the contract takes this DAI, lends it to the Yearn contract and receives the YDAI shares that are equivalent to the amount deposited.
At the end of each cycle, the YDai shares are redeemed and the total amount of DAI, plus interest, is returned to each savings cycle and distributed among the members of that cycle.
Esusu (Cooperative Contributions Or Loan Pool)
Esusu describes traditional forms of cooperation in African societies whereby groups of individuals contribute to informal savings and credit associations for their mutual benefit. This is a very significant and integral part of cooperatives and credit unions in Africa and other regions of the world. Consider a union, or group of 12 members, who work in the same institution. To start an Esusu, they decide to all contribute 30% of their monthly salaries to one member (beneficiary) per month. Another member (beneficiary) receives the total contribution the next month till all members are paid in 12 months and the cycle can restart. These beneficiaries are able to utilize the funds for personal projects or needs.
Problems Faced By Traditional Esusu And Bank Enabled Esusu
- Esusu members are usually a maximum of 12 to ensure a full year cycle and to reduce the number of defaulters.
- Overall contributions generated from Esusu groups are quite small, as the number of members are small.
- Bank-enabled Esusu must work with members with regular salaries and members must have their bank accounts with the same bank or mobile wallet.
- Traditional Esusu contributions are at risk of currency devaluation with countries where the currencies are unstable.
Architecture
This shows how the Esusu algorithm is integrated into the Xend Finance Protocol.
Equations and Parameter Definitions For Esusu
Parameter DefinitionsTotal available time in seconds — TaTotal Time interval in seconds for beneficiaries in this cycle — BtNOTE: Beneficiary is anyone who has withdrawn overall ROI during his payout time intervalCurrent time in seconds — TxTotal accumulated ROI — TroiMember ROI — MroiCycle payout interval in seconds — TEquationsBt = T * number of beneficiariesTa = Tx — BtTroi — ( (balance shares * price per full share) — total deposited — total capital withdrawn)Mroi = Troi / Ta
Here is how the Esusu Contract Looks:
Xend Finance Reward System
Xend Finance protocol strategy for further distribution of tokens is through Liquidity mining or rewards-based system. The protocol incentivizes the users when they deposit DAI (liquidity provision) to the smart contract for a period of time — typically 30 days.
The reward system is time-based in order to ensure that the users of the Xend Finance protocol are in for the long term as this ensures the growth of the Xend Finance ecosystem.
Here is a code snippet
Building Web And Mobile SDK
We will be building a web and mobile SDK to allow existing wallets and fintech apps to easily allow their users to save on Xend Finance. Our SDK will enable the users to seamlessly save using the fiat currency in their digital wallets or credit/debit cards. Users will also be able to receive their interest in their mobile wallets through the SDK.
Adding Binance Smart Chain Blockchain
Binance Smart Chain allows cross-blockchain assets and data transfer across multiple blockchains. It supports extremely fast transactions and very low fees. Binance Smart Chain Testnet will be available in Q1 2021.
Xend Finance Governance Framework
Xend Finance is Decentralized Autonomous Organization (DAO) governed by $XEND holders using three different smart contracts: Xend Token Smart Contract, Governor Smart Contract, and Time Lock Smart Contract
These smart contracts will allow the Xend Finance community to propose features, vote, and execute approved proposals. The Governance contracts are currently being developed.
Smart Contracts And Audits
We are currently having our smart contracts audited and would love good auditors from the community to reach out to us if they are interested in performing an audit at a subsidized cost.
Our smart contracts have over 5,000 lines of code in total.
Please send us an email at hello@xend.finance.
We hope this has been helpful in giving you a look into the Xend Finance architecture and our plans for the future. Please follow our Medium for upcoming posts introducing our founding team, investors, and for a deeper look at why we chose Binance Smart Chain and the real-world problems we are solving.
Don’t forget to join our Twitter and Telegram for our latest updates. We are very appreciative of your support.
Sincerely,
Aronu Ugochukwu
Co-Founder and CEO of Xend Finance
