Traditionally, the cryptocurrency lending market works by having users collateralize their idle cryptocurrencies in exchange for fiat or crypto-based loans. This creates immense opportunity for crypto enthusiasts looking to access additional revenue streams without losing out on potential yields driven by value growth.
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When engaging in DeFi lending, profit opportunities are oftentimes endless, yet narrowed down by one’s available capital. Whilst exchanging more fiat to cryptocurrency is encouraged over the long-term, tens of thousands of DeFi users miss out profit due to limited cash flow availability.
Freeliquid was created in hopes of facilitating higher APYs by providing DeFi users with stablecoin loans secured through the collateralization of liquidity pool tokens. After seeing huge success on Uniswap, Freeliquid now accepts Curve’s 3pool LP tokens as collateral, and is planning an expansion to the Binance Smart Chain.
Understanding Freeliquid’s Value Proposition
Automated market makers (AMMs) are decentralized exchanges that work by having users pool capital together in different trading pairs. Crypto swaps are carried out using users’ capital, so they are rewarded with a cut of the transaction fees. In most cases, this leads to considerable annual percentage yields, as millions of AMM transactions are carried out daily.
Liquidity providers are often unwilling to de-pool their tokens as this would lead to a sharp drop in the APY, yet they’re also unable to use these funds for other purposes.
Freeliquid positively disrupts the DeFi lending market by accepting liquidity pool tokens as lending collateral. Uniswap and Curve users can seamlessly obtain loans amounting to 90% of their LP share, with flexible terms and no interest rates. All Freeliquid loans are given in USDFL, a stablecoin that’s soft-pegged to the USD. Upon receiving a loan, users can provide additional liquidity, and obtain even more collateralizable LP tokens. Noticeable APY improvements can be observed after repeating the process a few times. USDFL can also be exchanged to growing cryptocurrencies, or used to access staking incentives. The opportunities are virtually endless!
Exploring the Expansion to Curve Finance
Curve’s 3pool holds the world-record for the highest stablecoin liquidity on the market, estimated at $800 million. With liquidity pools in Dai, USDT, and USDC, Curve enables varying APYs between 16% and 40%. Curve users interested in Freeliquid’s borrow product can collateralize their LPs, leading to much higher potential APYs. As expected, 3pool LPs get to keep their CRV farming rewards upon paying back the USDFL loan.
This development was the direct result of community involvement in Freeliquid’s governance mechanism, accessible by FL token holders. To learn more about the Curve LP support, check out the Medium blog post.
Freeliquid Expands to Binance Smart Chain
Freeliquid plans to establish itself as the market’s no. 1 solution for LP-collateralized loans. In doing so, the team is actively working on the development of new features, updates, and integrations.
In the 2nd quarter of 2021, Freeliquid will expand to the Binance Smart Chain. This community-approved move will see an inflow of additional liquidity, thanks to BSC’s highly-popular AMMs. The expansion will lead to significant cost reductions, as BSC transactions only incur a fraction of the fees associated with Ethereum transactions. Freeliquid is also building an ETH-BSC bridge that will facilitate seamless swaps of its USDFL stablecoin and FL governance token between the two token standards.
To learn more, check out Freeliquid’s website, Medium, Twitter, and Telegram communities.
