Relite is all about making DeFi accessible for everyone. Users can hold, trade, and stake crypto assets from different blockchains on one protocol. Thanks to Relite, loans can be made in Ethereum and collateralized in Bitcoin. As DeFi moves into the mainstream, ease of use will no longer be seen as an added bonus but an absolute necessity.
However, the difficulty of use is not the only thing standing in the way of more people moving into the DeFi world.
Crypto is a very volatile space. It is not uncommon to see smaller altcoins lose or gain 50% of their value in a single day. For mainstream adoption of DeFi to occur, it is important that protocols provide more stability and security. Risk will always be a factor when it comes to investment. This goes doubly for the crypto world. However, the ease at which positions can be liquidated in a market this volatile can prove off-putting for many retail investors.
Relite’s Reserve Fund is a crucial part of the Relite protocol that will provide some much-needed security in an overtly volatile market. Thanks to the Reserve Fund, Relite can offer lower collateralization requirements. This is one of the critical functions of the fund.
However, the effect it has on securing the Relite market cannot be overstated. The Reserve Fund effectively grants insurance to the system in the case of a shortfall event. The fund will primarily consist of RELI governance tokens. RELI tokens can be staked in this fund, enabling additional incentives for RELI users. Staking in this fund will earn rewards that will be taken from the revenue.
The Reserve Fund provides security to Relite’s users. It can guarantee a loan if there is a sudden drop in the value of collateral supplied. If a loan is liquidated and the collateral is not sufficient to cover the cost of the loan, the security module is used to cover the gap. This means that even in a particularly volatile market, the lender’s investment is secure. This does not come at the cost of security for the borrower, though, as they have more wiggle room if their loan is in danger of being under collateralized. Relite is a safer system for everyone.
When compared to centralized finance, the volatility and unforgiving nature of DeFi is still a barrier to mass adoption. However, this will all change as DeFi becomes more and more mainstream. Protocols such as Relite are vital to this shift. Investing in DeFi is getting more and more secure.