With over $45 billion in tokens locked within the Ethereum-based decentralized finance market, banks are being shorted by financial enthusiasts worldwide. DeFi is here to stay, and unlike its centralised counterparts, it provides frictionless access to collateral-backed loans, liquidity pools, and hundreds of yield farming opportunities. Day in and day out, the market roars and produces a never-ending supply of success stories.
This is certainly the case with liquidity providers, the core pillars of decentralized exchanges, often referred to as automated market makers (AMMs). In exchange for supplying liquidity in token pairs, LPs receive a proportional cut of the transaction fees generated by their deposits. While this capital produces yields, it only does so for as long as it’s deposited in a liquidity pool.
What if there was a way to keep capital within a DeFi liquidity pool, but still utilise it to access additional revenue streams? Freeliquid is an LP collateral lending solution created for this very purpose.
Crypto-backed loans are certainly not new to the DeFi sphere. Traditionally, crypto enthusiasts can collateralize their digital currencies in exchange for loans in fiat or other coins. In doing so, one can securely access capital whilst still retaining the potential gains realized by their digital currencies.
While ingenious, the aforementioned strategy only works if you HODL crypto, but if already vested, access to additional revenue streams is restricted. Freeliquid is now opening the gates to stablecoin loans backed by liquidity pool collateralization.
Zero interest, and no time constraints – truly DeFi style!
Freeliquid works by having users collateralize their LP tokens, which serve as proof of ownership within designated liquidity pools. With 90% loans obtainable on the collateralized LPs, Freeliquid users are given USDFL stablecoins. Pegged to the dollar value, USDFL can be efficiently leveraged for further exposure to DeFi yield farms, liquidity pools, stakes, and standalone currencies.
With no time constraints in place, users can hold on to their additional revenue streams to infinity. Once ready to repay the loan, users deposit their USDFL to the Freeliquid smart contract, unlocking access to their LPs.
Following a successful community vote through the governance mechanism, Freeliquid has just announced upcoming support for the Binance Smart Chain.
The reasons behind this development are clear to any Ethereum DeFi enthusiast. Despite Ethereum’s huge value proposition, network scalability challenges have led to huge gas fees. Rather than wasting valuable ETH, DeFi users would rather bank on the newest opportunities.
Albeit centralized, the Binance Smart Chain provides industry-low fees, lightning-quick transactions, whilst remaining true to the blockchain ethos of transparency, immutability, and anonymity.
The move will not affect users; Quite the contrary! Freeliquid is building a BSC-ETH bridge for their USDFL stablecoins and FL governance token. With huge liquidity on AMMs like PanCakeSwap, the move will greatly benefit BSC-based liquidity providers.
The expansion is expected to occur in the 2nd quarter of 2021. Testing and smart contract adjustment is already well underway.
By using Freeliquid, billion-dollar liquidity providers looking to bank on the hottest DeFi opportunities can do so without pouring additional capital into the crypto market. Freeliquid reports active work on plenty of new developments, including an upcoming integration with Curve Finance.