The world is always evolving, with new inventions cropping up daily, blockchain being one of them. DeFi is one such discovery that gave the financial industry a 360-degree turn. Unlike the traditional banking systems such as insurance brokers and traditional banks that operate with a third party, DeFi operates independently.
The DeFi lending industry is based on trustless operation with no third party. Users are required to deposit their crypto coins for lending. Through P2P lending in the decentralized platform, a borrower can take a loan. The lender also gets to earn interest. The process is transparent and straightforward.
Nevertheless, despite the process seeming smooth and effortless for the lenders and borrowers, the current DeFi systems have challenges in their lending system. Sometimes, users can suffer losses if they don’t take the necessary precautions.
Challenges of the current DeFi lending
Flash loans attack
A flash loan is a type of uncollaterised lending technique that’s unique to the DeFi space. While there are capital efficiency arguments and use cases for flash loans, they are often used to exploit vulnerabilities in protocols. Flash loan attacks usually occur when bad actors in the market borrow large amounts of uncollateralized loans and exploit protocol vulnerabilities for their personal gain.
Impermanent losses are common in the DeFi system. The risk results when you place some of your assets in the liquidity pool. It occurs when the price of assets stored in the liquidity pool change after being deposited, resulting in unrealized losses.
How different is Multiplier?
Multiplier is undoubtedly changing the game. With a robust v1 and its advanced features in v2, the project adds tremendous utility to lenders and borrowers.
To participate, users commit their collateral to the lending pools, which are in turn made available to borrowers. Since Multipliers launch, it has accomplished its Q2 roadmap, including integrating new wallets, onboarding new collateral assets, and collaborations with leading players like Wault Finance, Alpaca Finance, and PancakeSwap.
Additionally, there are incentives and rewards for new lenders and borrowers. On top of the APY, borrowers who take a loan on BTC, BNB and ETH, and lenders who deposit stable coins receive rewards daily. There are also governance incentives. Currently, there is 400 bMXX shared daily among stakers, but this number will increase to 1200bMXX daily.
The increment of the government incentives is to encourage staking and foster greater participation in governance.
Outstanding Features of Multipliers
The soon to launch V2 will take Multiplier a notch higher. Its features are unmatched. The following are some of its unique features:
Adjustment of fees
There will be an adjustment of fees in several areas. For instance, there will be no loan origination fees. Also, there will be a reduction in flash loan fees to 0.02%.
Collateral Swap Feature
To ensure that users can swap their deposited assets to other assets when taking a loan, Multiplier will integrate PancakeSwap by making the swap feature available.
Advanced Batch Loan Feature
With the V1 feature, flash- borrowers were allowed to borrow only one currency at a time. However, with batch flash, developers may take a flash loan across multiple assets in the same transaction.
Through the debt tokenization feature, borrowers will be given a receipt as a representation of their debt. Therefore, the borrowers couldl monitor their debt positions from their cold wallets.
All fees that are generated by flash loans will be burned. It’s the first time bMXX will adopt a deflationary burn mechanism to ensure a healthier eco-system. The revenue that’s generated from the liquidation bot will buy and burn bMXX.
Both Stable and Variable Rates of Borrowing
With V2, borrowers can handle two positions simultaneously, using the same underlying asset and also from the same wallets. These positions are the variable borrow position and stable borrow positions. Borrowers, therefore, have flexibility when it comes to their loan position at any time during their loan.
The Multiplier has lots of unique features for all interested in lending and borrowing in crypto collateral. Start staking now, and participate in the Multiplier protocol!