Hifi Finance launches fixed-rate cryptocurrency lending protocol
By Pavithra R
Hifi Finance (formerly Mainframe) has announced the launch of its fixed-rate cryptocurrency lending protocol, which enables anyone to create fungible debt obligations on the ethereum blockchain.
Fixed-rate lending options allow investors to map out finances and trading strategies better. The HiFi protocol lowers collateral requirements for cryptocurrency lending and lifts the barriers preventing highly volatile assets as potential collateral pairs for crypto lending and borrowing applications.
Initially, HiFi will offer USDC stablecoin borrowing with WBTC (wrapped Bitcoin) collateral, and the team plans to rapidly add products and services to expand lending markets and collateral pairs.
“Fixed-rate lending is an important milestone for DeFi. Investors and traders need less-volatile options so that they can plan finances, have predictability in expenses and hedge investments with certainty. With the surge in DeFi lending activity, protocols like Aave have attempted to offer stable rate lending. However, market volatility has diminished the value of these “stable” rates as borrowers incur fees to maintain a semi-fixed position,” said Doug Leonard, CEO of HiFi.
The cryptocurrency market is witnessing dramatic volatility, and developers struggle to balance between collateral demands and incentives for borrowers and lenders. Still, the decentralized finance (DeFi) markets have ballooned to a more than $40 bn evaluation. HiFi’s protocol automates incentives in a perpetual balancing act that optimizes value for all parties in the lending process.
HiFi works by automatically adjusting incentives between borrowers, lenders, and guarantors. Borrowers deposit collateral and mint tokens, representing a debt obligation. Lenders purchase the tokenized debt obligation and redeem them for face value at maturity. In the future, the protocol will allow guarantors to purchase collateral at a discount when collateral-accounts fail to satisfy the collateral requirement.
“HiFi opens up decentralized lending to a whole new world of diversified debt markets. Fixed-rate lending, especially for volatile assets, allows traders to take more aggressive positions and rewards all parties in the process with greater ROI,” said Leonard.