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Why Lending?
EnsoFi
·
June 5
The financial world has long been familiar with the concept of lending, encompassing various forms such as mortgages, lines of credit, and personal loans. However, with the advent of web3 and the rise of cryptocurrencies, a new paradigm of lending has emerged. Lending and borrowing have become crucial strategies for enthusiasts to gain exposure to digital assets, generate passive income, and strengthen their portfolios.
At its core, lending is a digital adaptation of traditional credit and loan systems within the web3 space. Borrowers can secure loans by offering their cryptocurrency holdings as collateral. Conversely, lenders can offer their assets to borrowers in exchange for interest, similar to the interest earned from traditional savings accounts in banks.
Lending has emerged as the 2nd largest sector within DeFi , showcasing remarkable growth and solidifying its importance.
Since October 2023, the total value locked (TVL) in DeFi lending protocols has experienced a significant surge, growing from $14 billion to an impressive $33 billion by May 2024. This rapid growth trajectory suggests a robust recovery and a strong potential to reach the all-time high (ATH) TVL of $50 billion, last seen at the end of 2021 and early 2022.
The current crypto environment, marked by the acceptance of Bitcoin ETFs and increased mainstream attention, has acted as a powerful catalyst for this remarkable growth in DeFi lending. The institutional validation and wider adoption brought about by these developments have bolstered confidence in the crypto market, driving more users to explore and invest in DeFi platforms.
As a result, the lending sector within DeFi is poised to continue its upward trend, fueled by enhanced accessibility, investor interest, and the innovative nature of decentralized financial services.
The blockchain industry is still growing, with DeFi at its heart. Within this space, the DeFi lending market has reached $10.3 billion. However, compared to the enormous $10.5 trillion global lending market, crypto lending makes up only 0.1% of the total. This huge difference shows how new the crypto lending market is and how much room there is for growth.
Most of the top players in the crypto lending market, like Aave, Compound, Kamino, and MarginFi, etc, use a peer-to-pool lending model. In this model, lenders put their assets into a pool, and borrowers can take loans from this pool. This system helps manage capital well and has been key to the early success of DeFi.
Despite the benefits, peer-to-pool lending has a big problem: floating interest rates. These rates change based on how much of the pool is being used. When the pool is heavily used, rates go up quickly to reduce usage. However, this system isn't very effective and usually just keeps usage at an optimal level.
The issues with floating interest rates in peer-to-pool lending models create unacceptable rate spreads that hinder the development of a mature financial system. Even if large institutional liquidity were available, there would still be significant slippage on large loans. To enable DeFi to go mainstream and fully realize its potential, it is crucial to address and fix these rate spread problems. Otherwise, the crypto lending market is missing out on tapping into the huge $10.5 trillion global lending market.
Fixed-rate lending can address these issues by providing a stable and predictable rate environment. This stability is crucial for attracting institutional-sized liquidity, which requires reliability and precision in financial planning. With fixed rates, DeFi can offer more appealing and understandable products, making it easier for new users to enter the market and for existing users to plan their financial strategies effectively.
The introduction and traction of fixed-rate lending in DeFi can remedy the problematic rate spreads, establishing a legitimate yield curve. This foundational change is necessary for the development of more complex financial derivatives and applications. Yield derivatives, for instance, hold exciting potential within the crypto space but require a healthy and stable interest rate foundation to thrive.
Fixed interest rates can create a more mature and efficient DeFi ecosystem. They will enable better risk management, improve user confidence, and facilitate the creation of advanced financial products. As DeFi continues to grow, the demand for fixed interest rates will become increasingly critical in shaping a sustainable and integrated financial future.
In 2023, Ethereum's liquid staking market experienced significant growth, primarily driven by the Shapella upgrade, allowing withdrawals from the Beacon Chain. This led to a rise in staked ETH, reaching 28.6 million ETH by December 2023. The adoption of liquid staking derivatives (LSDs) also surged, with approximately 44% of all staked ETH now held in these protocols. This expansion has been fueled by yield-seeking ETH holders and the increasing utility of LSDs within the DeFi ecosystem.
Additionally, Solana's liquid staking market saw Marinade initially dominate, but Jito emerged as a strong competitor, particularly in Q4. Jito's success was partly attributed to the distribution of Jito points, which led to a significant airdrop event. The lowest tier of users received 4931 JTO tokens each, estimated to be worth ~$10K on the day of the airdrop. Additionally, BlazeStake, a newcomer, offers token-incentivized rewards for staking, successfully providing bSOL holders with additional yield opportunities.
As liquid staking brings a wave of innovation to the DeFi product stack, the demand for new and innovative financial products continues to rise. One of the most exciting developments in this area is the concept of LSDfi, which has started to gain traction as the next big thing. Leveraging liquid staked tokens (LSTs) has become a necessity for several reasons.
The ability to lend and borrow LSTs natively within DeFi platforms can significantly enhance liquidity and capital efficiency. By allowing these assets to be used as collateral or for earning yields, DeFi platforms can attract more users and increase the overall utility of staked ETH. This native lending and borrowing capability can serve as a major catalyst for growth within both the liquid staking and lending markets.
The current DeFi landscape is characterized by a plethora of blockchain networks, each with its unique features and ecosystems. While this diversity fosters innovation, it also leads to fragmentation, where assets and liquidity are confined within individual chains. This siloed approach restricts users' ability to fully leverage their holdings, as they are often unable to seamlessly move assets between different platforms
Liquid staking derivatives (LSDs) are a prime example of how cross-chain functionality can enhance DeFi. In both the Ethereum and Solana ecosystems, LSDs have emerged as vital tools for providing liquidity to staked assets. However, the benefits of LSDs can be significantly amplified through cross-chain integration. For instance, liquid staked ETH and SOL could be utilized across multiple DeFi platforms, regardless of the underlying blockchain, thereby increasing their utility and yield opportunities.
The adoption of cross-chain solutions is inevitable as the DeFi ecosystem continues to expand. A connected ecosystem, where assets can move freely between chains, will unlock new possibilities for innovation and growth. Users will benefit from increased liquidity, enhanced yield opportunities, and a more seamless DeFi experience.
Learn more about EnsoFi
EnsoFi Official Channels
Official Website | Discord | X | Docs
Why build on Sui?
EnsoFi
·
May 29
EnsoFi is committed to revolutionizing DeFi sector by providing the first cross chain peer-to-peer lending experience. As part of our growth strategy, EnsoFi has chosen Sui as the second blockchain to build on, leveraging its unique features to enhance our platform. By incorporating cross-chain, EnsoFi aims to enable users to lend and borrow assets on Sui while using collateral from other chains. This strategic move not only broadens our technological foundation but also provides our users with a more versatile and robust DeFi ecosystem.
Parallel Execution for High Throughput Sui utilizes a parallel execution system that allows multiple transactions to be processed simultaneously. This significantly boosts the network's throughput and scalability, enabling it to handle a high volume of transactions efficiently. Unlike traditional blockchains that rely on sequential processing, Sui's parallel execution reduces latency and increases transaction speeds, making it an ideal choice for applications requiring high performance.
Object-Centric Data Model Sui’s architecture is built around an object-centric data model, where all entities on the blockchain are treated as objects with clear ownership and capabilities. This model enhances security by allowing precise access control and simplifies the development of complex dApps. Objects in Sui can be uniquely identified, tracked, and managed, providing a straightforward framework for developers to create and interact with blockchain entities.
Low Gas Fees and Competitive Costs Sui offers competitive gas fee models that attract developers and users by keeping transaction costs low. This affordability is essential for mass adoption, making blockchain interactions more accessible and sustainable for everyday use cases, such as micropayments, ticketing, and other low-value transactions.
Innovative Cryptographic Solutions Sui employs advanced cryptographic techniques, such as zkLogin, which enables secure and frictionless user onboarding using standard web credentials like Google and Facebook. This integration simplifies the user experience, allowing for seamless interactions with decentralized applications without compromising security.
Enhanced User Experience By building on Sui, EnsoFi benefits from the blockchain’s high throughput and low latency, ensuring a smooth and responsive user experience. The parallel execution capability means our users can enjoy fast and reliable transactions, crucial for real-time financial applications.
Security and Transparency Sui’s object-centric model and advanced cryptographic solutions enhance the security of our platform. Precise access control and verifiable interactions ensure that users’ assets and data are protected, fostering trust and confidence in our system.
Cost Efficiency The low gas fees on Sui enable us to offer a cost-effective platform for our users. This affordability is crucial for attracting a broader audience, including non-crypto users, by lowering the barriers to entry and making blockchain technology more accessible.
https://x.com/Ensofi_xyz/status/1795648907927830716
EnsoFi is excited to announce its participation in Sui's global hackathon, Sui Overflow. As the event approaches its final days, our team is fully dedicated to leveraging this opportunity to showcase and refine our platform. With only few days left, we are in the final stages of completing nearly 100% of our tasks, demonstrating our commitment and enthusiasm for this significant event.
The Sui Overflow hackathon is a pivotal moment for us, providing a dynamic environment to innovate and integrate the unique features of the Sui blockchain into our project. Our participation underscores our dedication to pushing the boundaries of what's possible in decentralized finance. Despite the challenging timeline, the EnsoFi team is working around the clock, driven by the spirit of collaboration and innovation that the hackathon fosters.
Through this hackathon, we aim to highlight the capabilities of EnsoFi within the Sui ecosystem, focusing on cross-chain lending and borrowing solutions that can bring unprecedented value to our users. The progress we've made so far is a testament to our team's hard work and the potential of our platform to revolutionize DeFi.
Stay tuned for updates as we continue to make strides in the #SuiOverflow hackathon. Our journey here is just beginning, and we are eager to share our advancements and contributions with the community. Let's make this a memorable event together!
Learn more about EnsoFi
EnsoFi Official Channels
Official Website | Discord | X | Docs
Why Solana?
EnsoFi
·
May 25
As the DeFi landscape continues to evolve, selecting the right blockchain to build on is crucial for the success and growth of any project. EnsoFi has chosen Solana for several compelling reasons, ranging from its supportive community culture to its advanced technological capabilities and its burgeoning DeFi ecosystem. Here’s an in-depth look at why EnsoFi is building on Solana.
One of the standout point of the Solana ecosystem is its robust and supportive community culture. This culture is deeply ingrained in the blockchain’s ethos and is evident in the actions of the Solana Foundation and the broader community. A notable example is when the Solana Foundation supported the Madlads project by adopting Madlad profile pictures (PFP) as their avatars. This act not only highlighted the foundation's endorsement but also fostered a sense of unity and encouragement within the community.
Beyond the foundation, various community-led initiatives play a pivotal role in nurturing new projects. For instance, MonkeyDAO, SuperteamVN, SuperteamUAE and the Pyth Network are known for their active engagement and support of emerging projects through activities such as AMA sessions and FireBuilder chats. These initiatives provide new projects with a platform to gain visibility, share their vision, and receive valuable feedback from experienced community members. This level of support is instrumental in helping projects like EnsoFi gain traction and grow within the Solana ecosystem.
https://x.com/PythNetwork/status/1784961140239569032
https://x.com/SuperteamVN/status/1773224788619898955
https://x.com/SuperteamAE/status/1778331303538036772
https://x.com/MonkeDAO/status/1769477075117756776
One of the key technological advantages of Solana is its capability for parallel execution. Unlike many blockchains that process transactions sequentially, Solana can handle thousands of transactions simultaneously, significantly enhancing its scalability and efficiency. This feature is particularly beneficial for DeFi platforms like EnsoFi, where high transaction throughput and low latency are critical.
Parallel execution enables EnsoFi to process multiple lending transactions concurrently without bottlenecks. This ensures a seamless user experience, even during periods of high demand. The ability to handle large volumes of transactions quickly and efficiently makes Solana an ideal platform for implementing sophisticated DeFi protocols. By leveraging Solana’s advanced technology, EnsoFi can offer competitive interest rates and rapid transaction confirmations, enhancing the overall attractiveness of our lending services.
Solana's reputation as a top choice for DeFi is well-supported by its impressive growth in Total Value Locked (TVL). From October 2023 to May 2024, Solana has seen a significant increase in TVL to almost $5B, reflecting the growing trust and adoption of its DeFi ecosystem. This growth is indicative of Solana’s robust infrastructure and the confidence that users and developers have in its long-term potential.
The surge in TVL highlights the effectiveness of Solana’s technology and the successful deployment of various DeFi projects on its platform. For EnsoFi, building on Solana means aligning with a blockchain that is not only technologically superior but also one that has proven its capacity to attract and retain significant capital inflows within its DeFi landscape.
EnsoFi’s decision to build on Solana is rooted in a strategic alignment with a community-oriented, technologically advanced, and rapidly growing blockchain. The vibrant NFT culture, robust technological infrastructure, and impressive growth in DeFi adoption make Solana the ideal platform for EnsoFi to realize its vision of revolutionizing decentralized finance. As we continue to innovate and expand, we are confident that Solana’s ecosystem will provide the support and scalability needed to drive our success and deliver unparalleled value to our users.
Introducing EnsoFi
EnsoFi
·
May 23
EnsoFi is the first decentralised peer-to-peer cross-chain lending platform, giving users the ability to lend on one chain while collateralising on other chain at a Mutually Agreeable Interest Rate.
We know that most of the top players in the crypto lending market, like Aave, Compound, Kamino, and MarginFi, etc, use a peer-to-pool lending model. In this model, lenders put their assets into a pool, and borrowers can take loans from this pool. This system helps manage capital well and has been key to the early success of DeFi.
Despite the benefits, there are 2 problems on peer-to-pool lending that EnsoFI aims to solve: Interest Rate Gap and Fluctuating Interest Rate
These issues create unacceptable rate spreads that hinder the development of a mature financial system. Even if large institutional liquidity were available, there would still be significant slippage on large loans. To enable DeFi to go mainstream and fully realize its potential, it is crucial to address and fix these rate problems. Otherwise, the crypto lending market is missing out on tapping into the huge $10.5 trillion global lending market.
One of the most significant issues in pool lending protocols is the interest rate gap or spread between borrowing and lending rates. During high demand periods, this spread can peak to as much as 15%, resulting in lenders earning less while borrowers pay more.
For example, as shown above, on Kamino, there’s a period when the interest rate spread can reach to 14.3%.
In the future, this is when EnsoFi will come in and remove the middleman, lenders could set a higher interest rate, like 49%. This would benefit borrowers by allowing them to take loans at the same 49% interest rate directly from lenders, effectively reducing the overall cost for borrowers while lenders earn more.
Another major problem is the fluctuating interest rates that users face after taking a loan. Interest rates can double or even triple in a short period, causing significant financial stress for borrowers. This volatility is a result of demand exceeding supply, making it challenging for users to manage their loans effectively. This unpredictability makes it difficult to onboard non-crypto users who are unfamiliar with such high volatility and expect more stability akin to mainstream financial products.
Fixed Interest Rates: EnsoFi offers user-defined fixed interest rates that remain stable throughout the borrowing cycle. This ensures that both lenders and borrowers are protected from market volatility, providing a predictable and secure financial environment.
No Middlemen: We eliminate the need for intermediaries, which often add an extra benefits to both sides. By directly connecting lenders and borrowers, EnsoFi reduces costs and improves efficiency, offering better rates for all participants.
Cross-Chain Liquidity: EnsoFi leverages cross-chain technology to provide a seamless lending experience across multiple blockchain networks. This not only enhances liquidity but also enables users to take advantage of the best rates available in the market, regardless of the blockchain.
EnsoFi strives to become a key leader in the DeFi, particularly in bringing non-crypto users into the ecosystem. We envision a balanced lending environment where users can confidently participate in DeFi without worrying about unpredictable interest rates or excessive costs.
Our mission is to bridge gaps, eliminate middlemen, and bring stability to the lending space. By offering fixed interest rates and leveraging cross-chain technology, we aim to make DeFi accessible and attractive to both crypto and non-crypto users.
What We've Done:
What We're Doing
Register for Sui Beta-Test and launch Beta-test on Sui: We’re inviting even more testers to join EnsoFi on Sui. Sign up here for our beta-test to experience firsthand.
Engage with the Community: A huge shoutout to our amazing communities on Sui for their support.
https://x.com/suipiens/status/1792515433125589478
Mainnet on Solana is Coming:
We’re excited to announce that EnsoFi’s mainnet on Solana is on the horizon.
Stay tuned for updates on our mainnet launch on Solana.
If you have ideas, questions, or just want to chat crypto, join our Discord group to say hello, or follow us on Twitter, and visit our Website
