Lendefi

Lendefi Finance is an innovative DeFi trading protocol on the Binance Smart Chain. The protocol revolutionizes leveraged trading of digital assets by delivering a suite of advanced trading tools, within an undercollateralized lending model.

Lendefi (LDF) is an innovative DeFi protocol that allows lenders to securely lend their stablecoins and earn interest. Borrowers can access UCL to invest in crypto assets and expand their portfolios.

The decentralized finance (“DeFi”) ecosystem has grown exponentially over the past year and ushered in a new era for modern financial products and services. DeFi provides an infrastructure that uses the power of blockchain solutions to create reliable and modern financial solutions. DeFi products will replace almost all modern financial services, including savings, insurance, trading, and loans.

Early innovations in DeFi with several major platforms such as Compound, AAVE, bZx paved the way for the adoption of crypto lending and borrowing. However, the problem with these earlier offerings is that they are often overcollateralized and/or targeted for margin trading, hence inherently very capital inefficient and create a barrier of entry for the everyday lender or borrower.

So it is clear that the most compelling use case for DeFi is under-collateralized loans (UCL), which are needed now, more than ever, given the rapid rise of cryptocurrency into the mainstream, with the participation of tech giants like Facebook and PayPal.

The easiest way to understand UCL is to use the analogy of owning real estate through a mortgage. Welcome to the world of UCL - Imagine putting up only a portion of the house's value as a deposit and getting a mortgage to finance the rest, instead of having to pay the entire cost of the house yourself. If you want to cash out the profits from your investment, you can sell the asset and walk away with all the profits after paying the bank the loan and interest.

Now imagine you are taking out a loan to buy crypto assets like BTC, ETH, UNI, LINK, AAVE, or YFI. Let's say for example that BTC is worth $20,000, but you only have $10,000 to invest and you want to buy the whole BTC, not half of one. But if you go to your friendly local bank and ask for a loan to buy BTC, they will, of course, flatly turn you down.

Now what? A smarter option would be to take out a loan on a blockchain-based platform that offers UCL. But who will lend you money and why?

The interest that people get in the traditional banking system is almost zero or even at a negative rate in many countries where customers have to pay the bank to hold their money, which is a complete misconception. As a result, people are left with few or no reliable lending options where they can earn attractive interest rates on their money. While anyone can easily borrow money from the bank to buy assets like cars and houses, borrowers have several options for investing in crypto assets. This significant gap in the market remains untapped, and Lendefi fills this gap in the market.

The Lendefi protocol (“Protocol”) allows secured loans, giving lenders much-needed confidence in the highly volatile cryptocurrency market. Safe lending options will open up lending opportunities for traditional and private lenders to access higher interest rates without directly impacting crypto market fluctuations.

The Lendefi protocol removes intermediaries from the lending process and removes the bureaucracy associated with lending and borrowing. This removes any counterparty risk between the borrower and the lender, who can then transact business without trust.

The lender will receive a variable percentage and be provided with liquidity provided in the DeFi ecosystem in protocols such as Uniswap. Therefore, if the borrower is unable to maintain his loan, the Protocol ensures that the money is paid to the lender and the remaining capital is credited to the borrower.

Borrowers can choose from a wide range of supported assets to invest in borrowing under the Protocol. Supported assets can be added and removed through the Lendefi Decentralized Governance ("DAO") mechanism.

The base currency for lending and borrowing is the US dollar, which makes it more user-friendly and promotes widespread adoption. Lendefi has specifically chosen USDC because it is the most secure stablecoin in terms of custody and reputation given that it is a collaboration between Coinbase and Circle and is regularly reviewed and subject to regulatory compliance.

Technically it works like this:

1. USDC is transferred to the Lendefi smart contract (“Contract”).

2. The Borrower contributes USDC to the Contract and invests in one of the listed digital assets.

3. With an attractive loan-for-value (LVR) interest rate, the borrower can invest much more than equity in the borrower's deposit, securing the loan.

4. Borrowed funds are securely stored in the Contract.

5. When a crypto asset is sold, the principal of the loan is returned to the lender, while the balance remains with the borrower.

Security concerns have plagued many lending platforms in the DeFi space, where "instant loans" exploits have been commonplace. Platforms are resorting to higher yields to re-attract lenders. In reality, this aggressive tactic is a simple case of high risk = high return. Lendefi solves this problem by depositing the borrower's investment asset ("Asset") under the Protocol itself, thereby preventing exploits that allow a hacker to seize the Asset. As a result, the risk for borrowers and lenders is reduced, which in turn increases the trust in the Protocol compared to other DeFi lending platforms.

Saying "cryptocurrency shouldn't be mysterious" might be a cliché, but it's true. Most of the existing decentralized lending platforms are too confusing for the average person. This is where Lendefi comes in, an innovative DeFi protocol that offers a solution where everything is as simple as “borrowing and investing in crypto” or “borrowing and earning interest from stablecoins”.

As you can see, UCLs are not only attracting attention, but also severely disrupting the outdated financial system. Lending is at the heart of the banking system, so when challenged by the UCL, its ramifications will be widespread. Given the pervasiveness of the blockchain space, the future for DeFi-based undercollateralized loans looks bright.

LDFI is Lendefi's native protocol token ("Protocol"). LDFI is a governance token that controls the interest rate model, the inclusion of supported assets, the distribution of rewards and other conditions and any changes to the Protocol.

Governing Lendefi through a Decentralized Autonomous Organization (“DAO”) will allow token holders to actively participate in the governance of the Protocol.

Any address owning more than 1% of the tokens, or voting rights delegated to that address by more than 1% of the total, can create proposals, and changes can be made to the Protocol through a vote in the DAO.

The difference between the interest rate that the borrower pays and that received by the lender, otherwise known as the spread, will be used to purchase LDFI tokens on the market to be burned and rewarded.

In a process known as burning, LDFI tokens will be burned, resulting in a decrease in the total and circulating supply. This will increase the value of LDFI tokens, which will create additional value for token holders.

Various rewards will be provided to encourage the growth of the protocol and the creation of value for token holders.

LDFI token holders will be able to stake their tokens and in doing so will be rewarded in the form of LDFI tokens.

Lendefi will operate a liquidity reward program to provide rewards in the form of LDFI tokens to liquidity providers on a decentralized exchange where LDFI will be listed, such as Uniswap.

To incentivize the liquidation process, liquidators will be rewarded with a percentage of the collateral to be liquidated in the event of default by the borrower.

To facilitate the adoption of the Protocol, lenders and borrowers will be rewarded with LDFI tokens for using the Protocol.

Approximately 1,800,000 LDFI tokens

(2,150,000 LDFI including provision of blocked liquidity)

Approximately $720,000

500,000 LFI | $200,000 (ETH equivalent)