Following the excellent news that Master Ventures has decided to invest in Relite as part of their incubation MV FUEL platform, the question is: What was the potential that a Ventures Studio like MV saw in Relite Finance?
Based on the current demand for decentralized digital coins, the world has seemingly accepted cryptocurrency. The market value of Bitcoin alone is a strong opening argument for cryptocurrencies being mainstream. This global demand is what the cryptocurrency hoped for; however, it has its drawbacks.
Relite Finance addresses some of these decentralized operational shortcomings through its lending and borrowing platform, especially when the number of users utilizing DeFi platforms is exponentially increasing.
The argument can be made that crypto lending and borrowing is behind the recent uptick in demand for cryptocurrencies. Through DeFi and features such as staking, cryptocurrency companies created a pool of coins that the market needed. Sadly, borrowers and lenders were limited by the underlying blockchain supporting their respective currencies. Gas fees are high hampering the practicality of borrowing and lending. Having noticed these drawbacks, Relite Finance stepped in with a platform that tactfully tackles these glaring challenges.
The platform is a cross-chain lending solution that allows its users to lend and borrow using their native cryptocurrencies over one protocol. Polkadot powers Relite Finance; the platform uses Polkadot’s parachains and bridges to achieve interoperability. By leveraging this technology to build a platform at the forefront of DeFi, Relite Finance hopes to encourage participation in crypto lending and borrowing by making the platform financially inclusive and technically accessible for all.
Here, we discuss how Relite Finance’s approaches will create value for you in the cryptocurrency market.
The current DeFi format limits interchain or interprotocol trading through the fragmentation of crypto assets, limiting the practicality of trading in the decentralized market.
The solution — Using an innovative infrastructure to create interoperability, Relite uses Polkadot’s parachain and bridges to enable blockchain users to participate in the market without the limitations of individual protocols.
This translates to seamless lending and borrowing for you using cryptocurrencies across multiple chains. It creates flexibility by giving you more options to borrow or lend cryptocurrencies.
Some DeFi platforms cannot scale to meet their daily trading demands whilst increasing gas prices make transactions prohibitive to many. In most cases, scalability is a result of the underlying blockchain supporting the platform’s ecosystem.
The solution — To provide users with cheap gas prices, a suitable underlying protocol is required. Relite Finance, through Polkadot’s scalability, can achieve 1000 tps, as stated in their whitepaper, which significantly reduces the gas fees. The reasonable pricing means more money saved per transaction. It also encourages multiple daily transactions, an option many will not mind having.
Polkadot provides user analytics that allows for better insights on user behavior prediction and lending/borrowing risk. Relite will leverage user data in order to deliver a unique and customized experience for each individual. The model will prevent unnecessary loss for users that usually arise from taking overambitious loans.
Some platforms require borrowers to stake huge collateral that far exceeds the amount borrowed. In some cases, lenders charge a minimum of 150% or higher. The high collateral required discourages potential participants from these platforms.
The solution — Reasonable collateral is only achievable if the platform is sustainable. Sustainability in Relite Finance is achieved by creating a reserve fund and the existence of a maturity contract. It is also achieved by supporting a variety of crypto assets.
The reserve fund creates a cushion for borrowers through RELI, the native token of the platform, hence reasonable collateralization rates. Maturation contracts ensure that loans are repaid on time and not liquidated. Borrowers are protected from loss using this format.
Through the platform, your assets give you value by giving you access to loans at reasonable rates. For example, you can use your crypto assets to access other cryptocurrencies that may have better liquidity in your decentralized exchange of choice. The platform, therefore, gives you better access to liquidity indirectly within the market.
Relite Finance can act as a hedge against market volatility. Some cryptocurrencies are highly volatile. You can use these assets to gain access to more stable assets, preventing you from incurring excessive losses from market volatility.
For the unbanked, Relite Finance could efficiently act as your bank. You can make ‘deposits’ through staking for a specified period and earn rewards from your stakes. Credit facilities are also extended, making the experience similar to banking.
The governance model has been crafted such that the users have power over the operations of the platform. Users speak through their votes to decide on various issues concerning the platform. For example, users can vote to decide on whether to add new features or reject them. The user’s voice is powered by the RELI token, only those who own RELI get to vote.
Aside from voting rights, RELI gives you the chance to earn more through rewards and staking. By simply staking your RELI, you can earn passively from loan margins based on the amount staked.