Improved returns, options, and flexibility
- Instant loans with a better interest than Compound
- Payback loans with collateral
- Offering fixed-term and fixed-rate loans
First, let's look at our savings account.
We have optimized the savings pool contract to ensure the best rate both for borrowers and lenders. Here's how in detail:
Problems with competitors such as Compound Finance:
On average, the Compound borrower rate is 3-5% higher than the depositing rate. This interest rate earned by depositors is equal to the borrowing interest rate multiplied by the utilization rate. The utilization rate typically ranges from 40% - 75%. Or, if you reverse these numbers (60% - 25%), we see 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 on Compound.
Compound Finance supply and borrow rate on May 16, 2020.
DeFiner Optimized Borrow and Lend Rate:
DeFiner Savings has successfully resolved this issue. Our Taurus DeFi Savings account deposits excessive capital to a money market like Compound or Maker to improve our capital utilization rate to more than 85%
For example, let's say there is a total of one million USDC in the DeFiner savings account, and 50% has been lent out to borrowers. We now have half a million (500,000) USDC in excess capital. The DeFiner savings pool contract will automatically deposit 0.35 million (350,000) USDC to the money market (at Compound Finance or Maker), which will then earn 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 principal 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:
Currently, there are no fixed-term and fixed-rate loans offered in the DeFi space. The most common ones are loans with floating rates and no terms. DeFiner's peer-to-peer (or over-the-counter, OTC) marketplace allows for both fixed-terms and fixed-rate loans, with lenders and borrowers being able to fully customize collateral, rates, terms, and crypto asset.
- 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 crypto asset. 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.