A Growing Need for Decentralized Finance
Historically, the financial infrastructure for payments, savings and lending solutions has consisted of closed, centrally controlled systems. In recent years, a rising number of cyber threats have exposed this flawed design and put users’ financial stability at risk. Additionally, the capital-intensive nature of these financial institutions creates high barriers to entry and power concentration, which result in systematic risks and “too big to fail” problems’. Fortunately, the emergence of blockchain technology enables us to begin solving these problems by ushering in a new era of finance — #DeFi (decentralized finance). This includes building open, fully decentralized networks that can execute financial transactions instantly and securely without the need for central intermediaries. And due to the tremendous growth of second generation blockchains like Ethereum, the friction of developing and implementing smart contracts, decentralized applications and asset digitalization becomes much lower and cost effective. As a result, DeFiner was established to provide users worldwide with access to #DeFi solutions that allow them to effortlessly lend, borrow and earn on their own terms.
Problems with Existing #DeFi Providers
Decentralized lending platforms on Ethereum have failed to generate significant volume because of design inefficiencies that impose high friction costs on borrowers and lenders. Specifically, these services require users to create and market their loan requests directly on the blockchain (ETHLend, 2018) (Libra Credit, 2018). This results in recurring gas fees that must be paid each time they post, modify or cancel a loan. Thus, during evolving market conditions it is prohibitively expensive and time consuming to make modifications.
The majority of #DeFi platforms can only provide a single-chain lending marketplace (Libra Credit, 2018), most commonly Ethereum. The lack of cross-chain (multiple blockchains) lending functionality limits the use cases and market size for their platforms. Some implementations have attempted to implement cross-chain lending services, but mistakenly positioned themselves as a trusted custodian for the lenders and borrowers. This centralized approach fails to address inherent custodial risks and instead exposes user funds in a high-risk environment for theft or cyber-attacks.
Another common shortcoming of decentralized lending platforms is the failure to return the power of the system to users through a decentralized governance structure (Lendingblock, 2018) (ETHLend, 2018) (SALT Lending, 2017) (NEXO.io, 2017). While these services are utilizing blockchain technology to function, the governance structures and business models are no different than conventional, centralized entities. As a result, value distribution and critical parameters of the platform are governed by the development team, which contradicts the core value of decentralization — to restore seized profits and control from intermediaries to end users. Therefore, these types of platforms have distanced themselves from allowing users the opportunity to help develop, promote and govern the lending ecosystem.
How DeFiner is Innovating
DeFiner’s mission is to advance financial trust, growth and simplicity through the blockchain. To accomplish this, our team has approached system design from day one with a user-first mindset. This includes a commitment to full decentralization of the platform and maximizing value for the most active users. Unlike existing platforms, DeFiner will return all value created through the network back to users via its native token FIN (token details explained in future article). Furthermore, DeFiner eliminates custodial risk and intermediaries by utilizing smart contracts to execute all lending agreements directly on the blockchain.
We recognize the importance of providing a superior user-experience, especially in an emerging industry like #DeFi. That’s why a core feature of DeFiner is a hybrid solution for combining ‘off-chain loan agreement matching’ with ‘on-chain settlement.’ In this approach, loan offers and requests are broadcasted through our off-chain platform. An interested counterparty may then submit one or more of these similar counter offers off-chain and the loan requester can also modify, change, pause or cancel the loan request seamlessly. Once two parties agree on the loan contract terms, the settlement will happen on the blockchain instantly. Friction costs are minimized for loan requesters because they can signal intent off-chain and only utilize smart contract based transactions when a loan agreement is finalized.
Another key advantage of DeFiner is cross-chain compatibility, which will be introduced post-launch and enable our platform to integrate with different blockchains (Ethereum will be supported first at launch). This is important because it provides the ability to offer a more diverse range of crypto assets for lending and borrowing. Moreover, the DeFiner platform will never be a custodian for users, so their assets will remain securely stored on the blockchain within a smart contract. This prevents central parties from controlling your cross-chain assets, which solves the issues today with custodian risks.
Join the DeFiner soft-launch!
Starting on May 3rd, users can register to participate in DeFiner’s soft-launch by requesting early access to the platform. We will be accepting the first 300 users during the first week, and an additional 300 users the second week.