Goldfinch (GFI) is a DeFi (decentralized finance) peer-to-peer lending protocol. The network allows users to access unsecured cryptocurrency loans. The goal of the project is to expand blockchain adoption in the corporate sector and demonstrate the benefits of a decentralized credit protocol.
Goldfinch continues to be a popular project in the peer-to-peer lending industry. The protocol has helped more than 200,000 borrowers obtain collateral-free loans since its inception. Notably, the network is currently available to users in India, Mexico, Nigeria, and Southeast Asia. The developers intend to expand their services in the coming weeks.
What problems is Goldfinch (GFI) trying to solve?
The main problem that Goldfinch was designed to eliminate was the adoption of crypto businesses. One of the biggest factors that keeps companies from using P2P lending services is the fact that most require you to over-collateralize. This requirement means that you must deposit more than you intend to borrow to qualify for funding.
For years, the centralized sector offered qualified businesses loans without collateral. Today, Goldfinch seeks to bridge that gap and serve a growing niche through its proprietary system. Goldfinch seeks to “bringing crypto lending to the real worldby its developers. To that extent, the protocol succeeds.
Another major problem that Goldfinch helps eliminate is gatekeepers and middlemen. Gatekeepers are people who stand between you and your funding. In many cases, these people may include loan officers, bank staff, or even regulators. Unfortunately, these roadblocks impede companies’ access to these funds.
Goldfinch was created to broaden access to capital in emerging markets. The network works like pure code. Smart contracts and community governance systems are replacing bankers and loan officers. This approach is more transparent, fair and open. Therefore, more and more companies are opting for decentralized lending protocols.
It can take weeks to get access to your loan once approved when using a bank. The delays come from a variety of factors, including a host of third-party verification systems and security checks. Each of these groups adds more time to the loan equation. These delays can lead to missed opportunities for investors and entrepreneurs looking for immediate capital.
Goldfinch provides businesses with fast and open access to financing when they need it most. The protocol issues your loan on its own when you and a lender agree to the terms. The system eliminates all third-party verification requirements and adds transparency to the lending industry.
Goldfinch Benefits (GFI)
Goldfinch brings many benefits to the market. It is among the first DeFi lending protocols aimed at commercial customers. Additionally, the protocol leverages off-chain yield sources and composable DeFi to enhance returns on investment.
Borrowers enjoy greater flexibility when using Goldfinch. The system allows borrowers to propose loan terms, including interest rate and repayment schedule. Lenders can then scroll through these options and decide if they want to provide the capital to the junior tranches of borrower pools.
Lenders can get healthy returns on investment using this system. The network pays an average of 10-14% APY on lending and staking activities. These returns are deposited directly into your network wallet. Both protocols offer low-risk passive returns where your staked asset remains safe from loss.
How Goldfinch (GFI) Works
Goldfinch operates by decentralizing the loan underwriting process. The ecosystem includes a variety of key network users. These nodes include listeners. Auditors verify the state of the network and transactions. You also have lenders and borrowers. Lenders earn returns by providing liquidity to lending pools. The network also includes stakeholders and participants in community governance.
Users can become liquidity providers by contributing capital to the Senior Pool. The system was designed to automatically allocate the senior pool to the senior tranches of borrower pools. Everything can be tracked through a near real-time blockchain explorer.
Senior Pool Cash Mining
The liquidity mining protocol has 8.0% tokens allocated as returns. The goal of the system is to incentivize long-term liquidity providers and drive adoption. Under this policy, the network has a 12-month lock-in period. Once the period is over, your staked assets are returned plus your returns. You can then use these rewards to improve your next round of betting.
Users who wish to secure passive staking returns can do so by staking their GFI tokens to particular backers. This process allows the network to improve consensus times. Additionally, whenever staked bakers join a pool of borrowers, the staked funds provide additional protection against delinquent loans. This approach protects lenders from losses and keeps the protocol solvent.
GFI is the primary utility and community governance token for the Goldfinch protocol. The token serves a variety of roles including staking, voting, and as a reward token. In addition, all community grants and network incentives are paid out in GFI. GFI is an Ethereum-based token that adheres to the ERC-20 token standard.
The Goldfinch Council acts as the community governance DAO (decentralized autonomous organization) of the network. This system allows users to pitch their concepts and ideas to drive adoption or improve the ecosystem. Interestingly, the network operates a quadratic voting system that weighs your votes using an equation that multiplies your vote by the square root of the amount of GFI used.
Goldfinch (GFI) – DeFi2B Loan
Goldfinch seems to be well positioned as an early entry into the business sector. The protocol fills a niche market and gives companies better access to funding to develop their ideas and concepts. The network leverages the proven security of the Ethereum blockchain to remain valid. It also provides GFI with high interoperability within the market. For these reasons and more, you can expect to hear more about this project in the coming weeks.