Fringe Finance: Democratizing Access to Crypto Lending & Borrowing

The long-term vision of Fringe Finance is to make the DeFispace a safe place to invest and borrow. It has a Primary Lending Platform, where users can take stablecoin loans in exchange for locking their altcoins, and a USB StablecoinPlatform, where users can mint $USB, Fringe’s decentralized stablecoin, using their altcoins.

Moreover, Fringe also offers a solution to stake tokens and earn rewards. Essentially, it serves all three primary stakeholders of the crypto-finance economy: lenders, borrowers, and stakers. Its extensive partner ecosystem includes many prominent crypto players, such as Chainlink, Polygon, Elrond, Ren, Origin, Tomochain, Glitch, Router, and more. Fringe’s tokens, $FRIN, are available on exchanges and protocols like Ascendex, FMFW, Gate, Uniswap, and HitBTC. Here, we will delve deeper into each of its services to better comprehend its role in the crypto economy, its uniqueness, and its advantages. 

Fringe Finance Lending Platform: What You Should Know?

At its core, the Primary Lending Platform of Fringe helps investors deploy their capital and earn interest or take stablecoin loans against their altcoins. The lenders in this system can deposit whitelisted stablecoin assets to the Primary Capital Pool in exchange for the interest paid by borrowers who take loans in these stablecoins. Borrowers, on the other hand, can deposit whitelisted altcoin assets to the primary collateral safes to borrow from the capital pool. 

The uniqueness of the Fringe Finance lending platform lies in the way it manages its investment flow. Usually, crypto exchanges or peer-to-peer platforms match the assets of a lender with those of the borrower. Fringe doesn’t take that route. 

As a protocol, it aggregates the supply of each user, resulting in significantly increased liquidity than what is usually available in direct lending platforms. As long as every asset in a market is not borrowed, one can withdraw the assets without having to wait for a specific loan to mature. 

The interest rate in the platform is also dynamic. Fringe keeps adjusting it to strike a perfect balance between supply and demand. When the borrower demand is high, the protocol algorithm increases the interest rate, attracting more lenders to the platform. On the other hand, when there is low borrower demand, the platform algorithmically decreases the interest rate, attracting more borrowers. Fringe Finance also believes that crypto lending & borrowing’s true potential can only be realized by empowering its community. Hence, Fringe Finance DAO will take over the governance of the protocol in the long run. 

USB Stablecoin Platform

The Fringe stablecoin platform helps deposit collateral and mint $USB, Fringe’s decentralized stablecoin. This stablecoinis pegged to the price of 1 US dollar. Within the platform, which serves borrowers and stakers alike, the borrowers, or altcoin holders, can deposit their whitelisted altcoins. In exchange for these deposits, lenders receive the $PIUT non-transferrable token. Each PIUT token is pegged to $1 and represents the borrowing capacity of a user in USD. Next, the borrowers can mint USB stablecoins based on the amount of available PIUT tokens. USB holders qualify for staking their assets on the platform to earn interest. The interest is paid in USB stablecoins. 

Yield Farming and $FRIN staking

The purpose of yield farming opportunities is to incentivize participation. The users can stake their USB tokens as proof of their participation as a lender in the platform. In exchange, they receive FRIN token yield farming rewards, paid out in FRIN tokens from the treasury. FRIN token holders also qualify for rewards by staking their FRIN tokens to the FRIN staking pool. Each staker receives a reward proportionate to their share in the FRIN staking pool. The DAO decides what part of the fees will be paid to FRIN stakers. On exchanges like Gate and AscendEX, FRIN tokens are available for spot trading in USDT pairs. 

Fringe Finance: Other Features

Reliable and Resilient Price Feeds

The Fringe protocol leverages credible, well-known price oracles for its price feeds. When selecting its feeds, the protocol prioritizes each feed’s capacity to resist manipulation attacks. Fringe has plans to list additional tokens as collateral in the future. For now, it uses Chainlink as a reliable source for its price data. The selection of Chainlink has been incumbent upon its fulfilling several criteria. For instance, it satisfies the need for a collateral asset’s minimum liquidity, minimum daily volume, the spread of exchanges on which the asset is traded, and the asset having a notable portion of its volume traded on centralized exchanges off-chain. 

Cross-Chain Support

Next comes the quality or feature of cross-chain support, which is crucial to stay up to the mark in today’s ever-evolving crypto space and economy. The cross-chain support features of Fringe will benefit all its stakeholders, including the borrowers and lenders. It will help borrowers to collateralize their loans using collateral on another chain and also receive borrowed assets on another chain. The lenders will have the benefit of using assets on another chain and also receive interest payments on another chain. 

Fringe will also deploy a combination of bridging models. At present, notary models and Hash Time-Lock Contract protocols are ably satisfying the industry’s cross-chain requirements. However, Fringe keeps analyzingsystematically the solutions available to achieve cross-chain collateralization. In the days to come, Fringe’s technical team will prototype an assortment of technologies and assess each of their trade-offs. The host of factors that play crucial roles in the protocol’s cross-chain collateralization deployment includes security, non-custodianship/trust minimization, user experience, insurability, breadth of token support, breadth of chains supported, cost, and restrictions.

Fixed Interest Rates

Fringe will also come up with the option of fixed interest rates for its lenders and borrowers in the days to come. It will help include those crypto investors who look for predictable returns, especially the institutional actors and DAOs. It will help businesses avoid interest rate risk. 

User Interface

The Fringe Finance project will initially host its UI. However, the protocol is also careful about the needs of greater decentralization and mitigating the risk of coercion by agencies like a state regulatory actor. Seeing the need for decentralization, Fringe Finance’s long-term vision is to govern the protocol through Fringe Finance DAO. Therefore, in the future, the platform will let anyone deploy the client-side user interface. It will deploy the code on a decentralized file server. The users can download and execute the code easily from there. The client code will interact with already active smart contracts, ensuring greater decentralization through blockchain technology. 

Insurance

The Fringe Finance platform has struck a collaboration with Union Finance to leverage its insurance features. The partnership will help the borrowers to avail insurance benefits against the volatility risks on their collateral. It will also ensure a greater loan-to-value ratio. The likelihood of the loan falling below the minimum collateralization ratio and becoming subject to liquidation will be less. Fringe also wants to have an insurance facility that balances the aspects of low-cost premiums, enhanced security, and user experiences, improved purchasing coverage, and claim-making capabilities. 

Diverse set of Services

From what we have seen so far, it is evident that the Fringe Finance Platform comes with diverse services. These services include lending, borrowing, insurance, and fixed interest. One of the most important qualities for such multi-service providers to have is composability. Fringe is mindful to have composability in such a way that it becomes feasible for third-party solutions to leverage them. Catering to such a niche market can ensure long-term value and success for Fringe Finance. This is more so as industry experts anticipate a growth in the DeFi ecosystem over time where more and more third-party solutions will join the ever-expanding permissionless marketplace worldwide. 

The USP of Fringe Finance is that it brings inclusivity to the market by helping low-liquidity coin holders act as borrowers when lenders can also benefit from attractive interest rates by lending out their stablecoin capital on the platform. Fringe Finance offers an immediate-term, sustainable model of economic incentives for all its stakeholders. While we have discussed the benefits for lenders, borrowers, and stakers, the platform also incentivizes liquidators who help stabilize the platform. In the days to come, the platform will work on its governance model as well. It will make a definitive transition in its governance through the Fringe Finance DAO. 

Projects can always apply to whitelist their coins to become eligible for entry into the primary lending platform and the USB stablecoin platform. The right to accept or reject projects will be on the admin that will evolve into a decentralized community from its initial centralized structure. The platform will keep assessing the LTV ratios of different collateral asset types based on their risk profiles. The platform maintains its access flexibility by allowing users to pay fees through a contained list of stablecoin assets relevant to the event they are participating in. It keeps users free from the additional burden of converting their assets to FRIN tokens. 

The bottom line

The crypto space is growing at a rapid pace in terms of tokens as well as the number of users entering the market daily. Currently, the number of cryptocurrencies is just above 16,000, whereas the number of crypto users has surpassed 300 million. 

With so many cryptocurrencies in existence, it’s obvious that the number of crypto users holding smaller altcoins is likely to be higher than the number of crypto users holding larger cryptocurrencies like Bitcoin, Ethereum, Binance Coin, among others. 

Yet, the current breed of crypto lending platforms like YouHodler, BlockFi, Nexo, among others, have ignored the small-cap crypto owners, leaving them with only one option in case of urgent capital needs, and that is to sell their crypto holdings. To serve this growing segment, Fringe Finance currently has a democratic process for token creators through which they can submit their tokens for consideration. With this, Fringe Finance has ensured that access to crypto lending & borrowing is available to almost every crypto user, no matter which tokens they are holding. 

Overall, Fringe Finance offers greater inclusivity, diversity of services, and improved user experiences to its user base enabling it to potentially become a defining player in the crypto and DeFi space. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.