DeFiner: Why it's Different
Better returns to lenders, lower cost to borrowers, fixed terms and rates available
Instant loans with a much better interest than Compound
Payback with collateral
Fixed-term and Fixed-rate Loans
We have optimized the savings pool contract to ensure the best rate both for borrowers and lenders. Here's how:
Problems with Compound Finance:
On average, the Compound borrower rate is 3-5% higher than the depositing rate.
The interest rate earned by lenders is equal to the borrowing interest rate multiplied by the utilization rate. The utilization rate typically ranges from 40% - 75%, this means there is usually 25%-60% capital sitting there and earning nothing. This is the major reason that the spread between the borrowing rate and lending rate is so high.
Compound Finance supply and borrow rate on May 16, 2020.
DeFiner Optimized Borrow and Lend Rate:
DeFiner Savings has successfully resolved this issue by depositing the excessive capital to money market like compound or Maker to improve our capital utilization rate always more than 85%.
For example, let's say there is a total of one million USDC in the DeFiner savings account, and 50% have been lent out to borrowers. We now have half a million (500,000) USDC in excess capital. The DeFiner Savings contract will automatically deposit 0.35 million (350,000) USDC to the money market (at Compound Finance or Maker), which will then earning interest while the remaining 0.15 million (150,000) USDC will be held in reserve. This reserve ratio (now 15%) is adjustable and can be as low as 5%.
In the same scenario at Compound, 0.35 million (350,000) USDC will sit in their savings pool and earn nothing.
In this way, the spread between borrowers and lenders on DeFiner has been significantly lowered.
The chart below shows the interest rate comparison between DeFiner and Compound at different capital utilization rates. On average, DeFiner maintains an advantage of 2.46%. The largest advantage point happens at 51% capital utilization with an advantage of 3.65%.
Payback Loan with Collateral:
Another problem borrowers have is locked collateral. When they want to pay back the loan, they have to secure the funds to pay off the loan balance. However, their locked collateral cannot be used for this purpose.
DeFiner has an option for borrowers to pay back the loan with their locked collateral. To do so, the borrower pays a 2% fee to a 3rd party liquidator, which pays back the outstanding principle and interest on the loan. In exchange, the liquidator gets the equivalent amount of collateral with a 2% discounted price.
Fixed-term and fixed-rate loan:
A problem with the current DeFi market is that there is no fixed-term and fixed-rate loan option available. The most popular products are loans with floating rates and no terms. DeFiner provides an (over-the-counter) OTC loan solution offerings users fixed terms and rates.
DeFi OTC Loan: Aries
Fixed term, Fixed-rate;
Loan amount: >=1000$;
Terms: 4 weeks, 8 weeks, 12 weeks, 26 weeks and 52 weeks.
Both borrowers and lenders can fully customize their loans with individualized collateral, rates, terms, and currency. Users can scan available loans on the lending marketplace or submit their own request if they cannot find the loan they want.
Read more about these features here: DeFiner Products Introduction
How do I get started with DeFiner?
What is the digital asset savings account?
What is peer-to-peer lending?