Fringe Finance Simplifies Crypto Lending and Borrowing, Making The DeFi Space Inclusive

Fringe Finance allows borrowers to take a loan against smaller market capitalization altcoins, which has never been done before in DeFi.

Bishal Kumar Chanda2 min read
Fringe Finance Simplifies Crypto Lending and Borrowing, Making The DeFi Space Inclusive

With the rise of the public crypto space, the crypto lending and borrowing industry are also growing with record-breaking momentum. In 2021, the crypto asset industry attracted a record number of users, with 300 million current holders. Today, the DeFi space has more than 4.3 million active users compared to a mere 26,000 users in April of 2020. But how was it able to achieve such rapid growth? The answer is the lucrative investment options available in the crypto and DeFi space.

Out of the 300 million crypto asset holders, does every one of them only hold the most popular coins like Bitcoin and Ethereum? Obviously not! A significant number of people hold lower market capitalization coins that are much more volatile than the popular ones. Notwithstanding the upside potential of these assets, there is no option to lend these coins as there are no borrowers for them. Similarly, popular platforms like Nexo, BlockFi, Celsius and others do not allow borrowing funds on these coins, leaving the holders no option but to sell them when they need funds. This is where Fringe Finance (previously known as Bonded Finance) comes into the picture.

Click here to read detailed reviews about major crypto lending and borrowing platforms.

Fringe Finance has a simple methodology where users can put up smaller altcoins as collateral and borrow stablecoins against them. Compared to the traditional trading market, the crypto market is far more volatile. The smaller altcoins are the most volatile ones in the lot compared to the popular and high liquidity ones. But Fringe Finance ensures the financial stability of the platform even during high volatility, using various parameters, smart contract mechanisms, and security audits from recognized firms.

Any new project has the option to apply for the Fringe platform's token inclusion. The admin panel then strictly assesses the tokens and assigns them a tier that determines how they will get collateralized on the forum. Users can then deposit the accepted tokens to borrow stablecoins. The assessments are based mainly on price volatility, liquidity, non-circulating supply, and the ratio of non-circulating supply vs liquidity.

Fringe Finance's next goal is to transition the platform's governance to Fringe Finance DAO. The sustainable adoption of DAO can be good news for the community-focused platform's future. Fringe Finance's primary lending platform also provides flexible and dynamic interest rates. The borrowers need to pay interest on their open positions while lenders are paid interest on the funds they add to the liquidity pool. Overall, Fringe Finance is bringing a significant change in the DeFi ecosystem by allowing every token, no matter how big or small. It is worth reading Crypto Lending Safety guide for staying aware of all the risks involved in DeFi and CeFi crypto lending and borrowing platforms.

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