Ken Chia, Head of Friktion Institutional, stated, “In order for the market to mature, however, there needs to be a more sophisticated solution that offers a robust yet transparent infrastructure for institutions...”
Solana’s leading portfolio management platform, Friktion, has further widened its tentacles into the credit market. The company is making this monumental move by launching an undercollateralized crypto lending product, Friktion Institutional Credit.
Friktion made this known on Twitter.
Friktion Institutional Credit focuses on scaling and offering its products to crypto-native and traditional institutions. It also aims to unlock access to various sources of returns in decentralized finance and portfolio management.
This service will be offered at a fixed rate and term. Friktion Institutional Credit will bridge the gap in the crypto lending market. The majority of DeFi markets are highly collateralized. As a result, borrowers have put up more collateral while taking loans, creating a significant participation barrier in the DeFi ecosystem.
However, Friktion Institutional Credits aims to provide smarter risk-adjusted yields in the undercollateralized credit space with institutional-grade structures, reporting, and risk management.
In a statement by Ken Chia, the Head of Friktion Institutional,
“It is evident that there is a growing demand for institutional crypto credit. In order for the market to mature, however, there needs to be a more sophisticated solution that offers a robust yet transparent infrastructure for institutions — with an emphasis on lender seniority, clear credit underwriting standards, and risk management.”
To offer enhanced protection to lenders, lending pools will be tranched and priced by the market. The junior tranches will receive higher returns for offering default protection to senior lenders. Each loan pool will also consist of various borrowers to eliminate counterparty risks.
It is worth noting that Friktion has over 17,000 users and has traded over $3 billion across 25 assets. Friktion has $30 million in Total Value Locked. It has successfully attracted crypto-native and traditional institutions managing up to $60B in AUM. These institutions are seeking access to risk-adjusted and transparent yields on DeFi.
