Evolution Finance delivers the previously missing gear for the booming DeFi industry. It builds bridges and solves real problems by providing a locked liquidity protocol and a lending platform to yet untaped top 50 crypto assets in one stroke. But before FOMO`ing and diving into this revolutionizing project, let’s have an intro to the existing crypto lending market.
DeFi is a major factor for the current crypto bull market
With the world still recovering from the financial and economic after-effects of COVID-19, one area of finances is still going strong: Decentralized Finance (DeFi). According to DeFi-Pulse data, the ability to lend and borrow assets due to smart contracts has fueled this sector, with the current locked up value standing more than $12 billion.
Previously, cryptocurrency holders would need to sell their digital assets for fiat if they needed money. The rise of DeFi has changed all of this. Today, should you ever need fiat, you can simply connect with a DeFi platform and enter your BTC or ETH in a smart contract with a lender in exchange for stable coins (like DAI of MakerDAO), which you can redeem for the intended fiat. The smart contract stores your crypto. After you have returned the loan (including the interest), the smart contract returns your original deposited assets.
- Evolution Finance: Improved Liquidity will change DeFi in 2021Evolution Finance is targeting a 10x greater market than any other crypto lending platform. Thus DeFi lendings will soon surpass DALPs. Crypto borrowing/lending is led by Digital Asset Lending Platforms (DALPs) like Binance, Bitfinex, Blockchain.com, BlockFi, Celsius Network, Genesis Capital, […]
The Largest Crypto Lending Platforms
This is a simplification of DeFi lending, but this is essentially the overall concept. With no middleman or intermediary to take a hefty commission, both parties (lenders and borrowers) can enjoy benefits. The lender gets a higher interest rate than what a centralized party would offer. The borrower receives a lower at the same time.
The immensely growing crypto lending market has led to some big players entering, offering secure and safe lending services. MakerDAO is perhaps the largest of all Digital Asset Lending Platform (DALP). MakerDAO uses very complex algorithms to determine lending and borrowing, but with a straightforward method so that even an average person can use its services. Basically, MakerDAO allows people to deposit their crypto assets and directly mint the DAI stable coin. The platform works on a minimum of 150% collateralization rate, meaning for every $1.50 equivalent of crypto deposited, the borrower gets 1 DAI.
Aave is another DALP that offers different features such as non-collateral loans, flash loans, and even switch rates. Compound is perhaps one the most famous DALP, primarily due to its COMP token distribution and the resulting yield farming.
Issues with Current DeFi DALPs
Lending in the DeFi scenario makes it very fruitful for both lenders and borrowers due to the better interest rates. However, the industry faces a unique issue. Because blockchains are designed to work independently, the platform’s type of decentralized network limits the users. What if you had a Tron based asset and wanted to get a loan on a DeFi lending platform based on Ethereum?
The first thing you would need to do was; convert your asset into a compatible ERC based token, which you would then need to transfer to the DALP to get your required loan. Alternatively, if you had tokens from one blockchain sitting idle (or in a lending platform) and another platform offered better rates, you would be deprived of the opportunity to make better profits.
Secondly, when it comes to yield farming, DALPs have one major issue: inflationary tokens. Depositing collaterals create native tokens that don’t have a limited supply, going against the very foundation of cryptocurrencies (remember, Satoshi Nakamoto envisioned Bitcoin with only 21 million coins).
Due to these issues, the DeFi lending sector faces increased problems of not tapping the market’s actual potential and creating an environment where the tokens will lose value due to excessive minting.
Evolution Finance: Unlocking DeFi Lending
Evolution Finance is a DeFi DALP that has been designed from the ground up to cater to the issue plaguing the current industry. Based on the Ethereum network, the platform gives access and exposure to the biggest crypto landings, allowing the community and public to lend and borrow the top 50 crypto coins like; DOT, XEM, eGLD, AVAX, TRX, ADA, XMR, or DASH.
The concept is simple, of the 50 tokens, that are already Ethereum based are available on Evolution Finance. At the same time, the rest are wrapped ERC compatible tokens. Wrapped Ethereum tokens are essentially ERC tokens but are backed in a 1:1 method with the parent one. For example, a wBTC token will be backed by 1 BTC in reality. Therefore, if the value of BTC changes, so will the price of wBTC. In this way, the wrapped tokens are basically pegged to the original one.
Using this wrapped method, Evolution Finance allows for tokens to be used on the platform, even if they are not Ethereum based.
Here comes the game-changing revolution; rather than have an inflationary token model, Evolution Finance uses a deflationary model for its EVN native farming token. Every time a transaction is done with EVN, 1.7% of the total amount is deducted, to be distributed as follows:
- 1% goes to liquidity providers.
- 0.2% to EVN stakers.
- 0.1% for future development funds.
- 0.4% permanently burnt
Secondly, EVN liquidity providers tokens are permanently locked, called EVNY. These tokens cannot be recovered, and the providers are compensated with an ongoing 1% from the EVN transactions made.
Evolution Finance is the next iteration of DeFi lending. It is designed to unlock opportunities for both lenders and borrowers. Evolution Finance has the potential to shake off the lending markets.
- Our first Evolution Finance article on BlockStern: https://blockstern.io/evolution-finance-improved-liquidity-will-change-defi/
- Website of Evolution Finance: https://evolution.finance/
- Twitter of Evolution Finance: https://twitter.com/EVN_finance
- Blog of Evolution Finance: https://medium.com/evolution-finance
- Community Chat Evolution Finance: https://t.me/evolutionfinance
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