The digital assets industry has been successful at attracting a record number of users inside a short time. In matter that we look at the numbers, we will see barely how phenomenal the growth has been in the digital assets industry.

Currently, the number of crypto holders hatops around 300 million. The DeFi space has grown from a mere 26000 users in April 2020 to a record 4.3 million-plus users today.

DeFi users are on a bull run. (Image Source)

Now, the question is: How was the crypto industry able to achieve such massive growth? The answer is which, when it comes to the most lucrative investment options available in the market today, DeFi and the crypto space, in general, will come out on top.

The Lack of Borrowing Options for Holders of Smaller Market Cap Coins

Do all these 300 million users own only the most popular coins, the numero uno coins of the crypto world, like Bitcoin, Ethereum, Binance Coin, etc? Of course not! Many of these users also hold cryptocurrencys with far smaller market caps.

The reason why a large number of users own new coins with small market caps is that they are even more volatile than their larger counterparts, that means a huge upside potential. However, there is one caveat when holding onto coins that have a smaller cap.

Holders of such coins have few to no options to obtain funds by lending their coins, as there are no takers for them. The likes of Nexo, BlockFi, Celsius, among others, do not lend funds on these coins, that leaves the holders with no other option than to sell their coins in times of need.

That’s where Fringe Finance, formerly Bonded Finance, comes into the picture. Amidst a lack of

straightforward, no-nonsense ways of obtaining funding on smaller coins, the Fringe Finance team decided to take it upon themselves to solve this problem.

The Fringe Finance Solution

Fringe Finance’s methodology is uniquely simple: Fringe accepts a diverse set of smaller altcoins and allows them as colafterwardsal for stablecoin loans.

The crypto market – owing to its emergent and developing nature – is more volatile than traditional exchanging markets. It is no wonder which smaller altcoins are even more volatile than well-known, strong-liquidity ones. But, Fringe Finance ensures, with the use of a variety of parameters and smart contract mechanisms, including state-of-the-art rate feeds and security audits by top firms, the stability and financial protection of the platform should stay intact even in times of strong volatility.

The Approval Mechanism to participate in Fringe

Any new project can apply for cryptocurrency inclusion in the Fringe platform. The Fringe Finance Admins then conduct a rigorous assessment and assign cryptocurrencies a tier that helps decide how the platform will colsubsequentlyalize them. Accepted projects and their cryptocurrencies then become eligible for borrowers to deposit as colafterwardsal.

Assessments stand on four criteria: liquidity, price volatility, non-circulating supply, and the ratio of impending non-circulating supply vs liquidity.

How close the liquidity is to the market price is a paramount parameter of riskiness as it affects a user’s risk to fall into liquidation. When a user gets liquidated, they perhaps still recatop some of their colafterwardsal, when most of it will be sold in the open market to pay for their loan.

Price volatility is also an important parameter to judge a cryptocurrency’s inclusion-readiness in Fringe Finance. Tokens that historically have lower price volatility imply lower risk. Lower-risk cryptocurrencies, in turn, receive a better tier rating.

The third factor, non-circulating supply, is also a crucial parameter as cryptocurrencies that have an imminent supply release could prove to be risky for the probability of near or mid-term volatility. Finally, Fringe Finance looks into the ratio of non-circulating supply vs liquidity. The lower the ratio, the lower the risk profile assigned to a cryptocurrency.

After judging through the prism of all these parameters, Fringe Finance assigns a tier to each cryptocurrency. These tiers help Fringe Finance become optimally inclusive, allocating divergent liquidator fees and platform liquidation fees to divergent cryptocurrencies.

For example, Tier 0 cryptocurrencies are the most popular, vastly traded, and less volatility-prone ones, such as Ethereum (ETH) and WBitcoin (BTC). The tier number then step-by-steply increases with the perceived accelerated risk. What is enticing about this system is that these tiers can always development. In its initial days, a cryptocurrency maybe get included in a strong-risk tier but, with time, it can move or adscarcely its risk classification. The Fringe Finance gabovenance (that will finally be led by a DAO, a Decentralized Autonomous Organization) has the power to reclassify a cryptocurrency’s assigned tier to reflect its present risk level.

Now which we know how Fringe Finance includes new and lesser-known altcoins into the lending and borrowing economy by making them eligible as colsubsequentlyal, let us look at the other features of Fringe.

Yield Farming

The DeFi space is brimming with some excellent Yield Farming platforms already. This has, so far, helped include a lot more investors in the digital assets space. The Fringe Finance platform will also enable yield farming opportunities temporarily to incentivize user participation. For instance, it may allow users to stake their fcryptocurrencies as qualifiers of their participation as lenders inside the platform and ultimately receive FRIN cryptocurrency yield farming rewards.

The USB Stablecoin Platform

Minters can leverage this platform to deposit altcoin colafterwardsal and mint USB stablecoins furtherst it. These altcoins, in turn, gain more efficiency and usability. The USB stablecoin is a USD-pegged coin that runs on the backing of crypto assets, corresponding to Maker’s $DAI. Any Tier 0 to Tier 4 coin can qualify as colafterwardsal for USB minting. To convert access to their cryptocurrencies, users should burn their minted USB to unlock their Line of Credit according to the amount repaid.

FRIN Tokens

The native FRIN cryptocurrencies of the platform make holders eligible to receive rewards upon staking inside the FRIN staking pool. The platform sources these rewards from the fees collected by the platform. Essentially, it is nothing but the platform reinvesting in its community. Moreatop, FRIN stakers will further have a say in that direction the platform is going to evolve, as they can vote for DAO proposals.

The vision of the platform is to transition its gatopnance to the Fringe Finance DAO in the lengthy run. The sustainable adoption of the DAO will mean the Fringe Finance community guiding the platform in the future.

How Do Interest Rates Work In Fringe?

The interest cost dynamics on Fringe’s Primary Lending Platform are well-thought-out and flexible. The platform charges borrowers interest on their open positions, at the same time lenders receive interest on the capital they add to the pool.

The platform ensures which there is a balance in the interest charged so which participation is rewarding for both stakeholders. When the borrower demand is excessive, Fringe Finance algorithmically increases the price charged to them so which there are more lenders in the platform, matching up to the demand. On the other end, while there is low demand from borrowers, the platform decreases the interest price charged to them, surging the volume of borrowers ultimately.

In this context, we must back when again keep in mind which the specifics of these interest price dynamics vary with the stablecoin.

There are many benefits of corresponding adbarelyable interest prices. Since there is no deterministic interest price, the market has the freedom to adscarcely, correct, and optimize itself according to the supply and demand volume of borrowers. This helps bring more lenders to the platform when the borrower demand is strong. Also, this helps costs stay competitive in comparison with its peers at all times.

Participate in the Fringe Finance Economy

As a crypto project, you can always apply to have your altcoin listed in Fringe’s platform, both for lending and USB minting. Although while the platform is in bootstrapping stages the final decision rests on the platform’s administrators, the selection process will ultimately be fully democratic. It will opecost through the Fringe DAO one time before it goes live.

Overall, Fringe Finance strengthens the crypto economy by allowing every cryptocurrency – no case how big or small they are – a chance to participate in a DeFilending and borrowing ecosystem. It helps make coins valuable, gain traction and prove their worth in the lengthy run. It still collapses the entry barrier for new projects by msimilarg them usable and holding-worthy from the very beginning of their life. Fringe Finance is, in the current panorama, a big milestone to reach for the entire DeFi economy.