Pledge is designed to allow the creation of innovative structured and collateralized lending products. These include fixed interest rate swaps, refinancing, and financial derivatives around credit markets in order to allow investors to build diversified portfolios tailored to whatever level of risk exposure they are comfortable with. These kinds of markets do around $500 trillion in trade volume every year. Innovations in fixed yield vaults, variable yield vaults, tokenization of yields, and seniority of bonds - represented in Pledge using financial NFTs - gives Pledge a unique position as a “Lego building blocks” maker, improvising capital efficiency and reducing liquidity friction.
Pledge provides a suite of decentralized financial contracts, defined as financial NFT, hoping to facilitate its use and adoption as an integral part of the fixed income money market. These derivative trade smart contracts, which typically swap fixed-rate interest payments for floating-rate, interest payments are an essential tool for defi investors who can use them in an effort to hedge, speculate, and manage risk on or cross chains.
The World’s Next-Gen Open Finance Building Blocks Based On Financial NFT
Our goal is to build foundational technology and create building blocks for the next generation of decentralized and open finance. Unlike other DeFi projects, Pledge is designed to allow the creation of innovative structured and collateralized lending products. These include fixed interest rate swaps, refinancing, and financial derivatives around credit markets in order to allow investors to build diversified portfolios tailored to whatever level of risk exposure they are comfortable with. These kinds of markets do around $500 trillion in trade volume every year. Innovations in fixed yield vaults, variable yield vaults, tokenization of yields, and seniority of bonds - represented in Pledge using financial NFTs - gives Pledge a unique position as a “Lego building blocks” maker, improvising capital efficiency and reducing liquidity friction.
Pledge Protocol (“Pledge”) is an algorithm-driven, financial NFT based, cross-chain ecosystem covering lending and derivatives across many major public chains. At the current stage, Pledge first builds on the Binance Smart Chain. In the future, Pledge aims to become the infrastructure for the next phase of global financial market evolution...
Pledge finance is the latest lending protocol in the DeFi space. It aims to offer all crypto users, and not just savvy investors and day-traders, the ability to leverage their crypto into real-world assets, especially real estate. Instead of relying on central finance for capital, Pledge empowers crypto users to rely on DeFi for funding as they expand their portfolios into non-crypto assets and manage their risk profiles.
But there are other DeFi lending protocols that offer fixed-rate loans too, like Notional and Amber Group. So what makes Pledge Finance different? We’ll go over 7 things that make Pledge Finance unique as well as do a quick comparison between it and competitors.
1) Pledge is a Framework, not just a lending protocol
Pledge is fundamentally different from other DeFi lending protocols because it is fundamentally more than just a lending protocol. It is a framework that will allow many lending services to be built using our technology as building blocks, like the pToken and financial NFTs. Pledge is leveraging the immense creative power in the DeFi world to create an expansive line of financial products so that DeFi can become a mainstream option for average people.
2) Pledge Uses Financial NFTs
Developers using the Pledge framework will be able to use financial NFTs and smart contracts to create DeFi versions of things like insurance, bond markets, and interest rates swaps.
NFTs, or non-fungible tokens, have mostly been used in the art world to create real digital assets. The qualities that make that possible, i.e. being non-fungible and non-duplicatable, along with the ability to add metadata and conditions, make NFTs a great tool for financial markets.
Take bonds for example. A product built on Pledge could mint 10-year, 15-year, and 30-year bonds using NFTs. People purchase those NFTs which then guarantee a return in the time frame selected. Being a smart contract, third parties like banks, lobbyists, won’t be able to manipulate it for their own gain, and, being an NFT, the terms will be transparent, easy to understand and easily transferable. Read about other possible use cases here.
3) Cross-chain interoperability
Unlike other lending protocols, Pledge is focused on inter-blockchain operability.
Part of the essential convenience of traditional finance is the interoperability of different systems i.e. you can use cash, credit, and debit cards to pay for items and services. And though a little difficult, it is possible with little effort to convert your currency into whatever other currency you want.
DeFi is built on many different blockchain silos that don’t always communicate well. Until DeFi can bridge those gaps and offer the same level of convenience as traditional finance, it won’t really be able to compete or scale effectively. Pledge wants to bridge those silos to create a unified financial system that can truly be a feasible alternative to traditional finance.
Using financial NFTs and multiple liquidity pools tied to universal pTokens, Pledge believes it has the foundation and building blocks necessary for the next generation of developers to bridge the distances between different blockchain ecosystems.
4) Pledge Runs on the Binance Smart Chain
Whereas most other lending protocols run on Etherum, Pledge runs on Binance Smart Chain. Binance allows Pledge to do more transactions with fewer fees than other funding protocols because the block time and gas limits per block are better optimized. Plus, access to a deep network of wrapped tokens helps with interchain operability as well. Binance offers us a more functional foundation on which to build dApps that will be able to bridge DeFi silos and handle the future transaction rates needed at costs consumers can tolerate.
5) Pledge Has a Uniquely Qualified Team
Pledge has a truly unique and qualified team. Members include Professor David Tse who is working on the parking Ethereum 2.0 and core contributor of prism protocol, which exponentially increased the transaction rate on bitcoin. Our CEO, Tony Chan, has worked on Windows 95 and spent decades creating companies and working in the computer science world. Gary LeBlanc one of the frontier innovation professor teaching blockchain technologies in both Stanford and UC Berkeley. This mostly Stanford-based team has accumulated some of the brightest minds in the DeFi space in order to create something truly revolutionary.
6) Pledge Borrows Some CeFi Attributes to Increase Credibility
Binance Smart Chain is a more centralized blockchain which means it is able to offer more crypto-to-fiat exchange options. That extra flexibility in how to translate crypto into fiat currency makes it easier to leverage crypto assets into non-crypto assets while giving the security often associated with centralized finance.
However, Pledge uses smart contracts, its pTokens, and AMMs to take advantage of the best parts of DeFi as well. Thus, Pledge doesn’t rely on a centralized authority to manage rates and interest, protecting users from manipulative and sometimes predatory third parties like banks.
7) Pledge Focuses on Non-Traders
Most lending protocols understandably are focused on seasoned crypto day-traders, but Pledge is for non-traders with crypto assets. Pledge allows them to leverage those assets into real-world investments to diversify their portfolio. This allows them to diversify their risk profile as they want and gives them access to a more flexible lending strategy. The goal is to create an inclusive ecosystem crypto users can use to manage almost any asset.
Pledge Vs Other Lending Options
There are other crypto companies that have the ability to make long term fixed-rate loans, like Notional and Amber Group. Pledge differs from each in key each.
Although Notional offers long term loans, that is all it does. Offering fixed-rate, longer-term loans is important for the DeFi ecosystem to help it have the same functionality as traditional finance, but we believe ultimately that DeFi needs more fixed-rate products in order to be a feasible option for mainstream investors.
Amber Group can offer long term returns on investment, but they are an investment group rather than a lending and borrowing protocol like Pledge Finance. Although investment help is something certain crypto users want, Pledge wants to build a platform that developers will use to serve everyone.
Pledge distinguishes itself in many ways. Unlike most other lending protocols, it is built on the Binance Smart Chain, rather than ethereum, to increase fiat conversion capability and decrease fees. It aims to be a platform, not merely a protocol and is using technology like financial NFTs to forever change the fixed-rate and investment landscape.
Pledge is also aimed at non-investors and instead focuses on regular crypto users, allowing them the ability to use DeFi for all their financial needs rather than traditional finance for diversifying their portfolio. Soon, crypto users will be able to leverage their assets into non-crypto ones like real estate without needing a central bank for capital.
Overall, Pledge’s goals, aims, and capabilities are more expensive than competitors like Amber Group and Notional. We believe that DeFi can revolutionize the world of bonds, insurance, and lending, and that it can do so with the tools that Pledge Finance provides.
Introduction to Pledge Finance
September 10, 2021