Easyfi Network (EASY): First DeFi Lending Protocol on Layer 2

Easyfi Network crypto layer 2 defi on matic,
Easyfi Network crypto layer 2 defi | Blockchainblogging.com

Easyfi Network is the first ​DeFi Lending Protocol built on a layer 2 solution. It focuses on scalability, composability, and adoption. It has been designed to support open and inclusive financial network infrastructure running on public networks to promote end-to-end lending & borrowing of digital assets. Founded in the year 2020 by Ankitt Gaur (CEO) and Co-Founder Anshul Ghir (COO),  EasyFi supports permissionless networks & automation of smart contracts.  Read all about the History of Ethereum here Link

Easyfi Network works on the Matic Mainnet network enabling collateral-based secured loans on the Layer-2 of Ethereum. This makes EasyFi the first DeFi Lending Protocol accessible to many users with absolutely negligible congestion in the network.

FAQ’s to be covered

Decentralized Finance (DeFi)
Layer 2 Solution of Blockchain
Collateral based Loans on Smart Contracts
Product Services offered by Easify

Easify Network : First DeFi Lending Protocol on Layer 2

Decentralized Finance (DeFi)

Decentralized Finance (DeFi) is a term for financial services with no central authority controlling them, unlike Institutions with Central Finance (CeFi) in which decisions are taken by a single person or a company. 

Development in DeFi Blockchains since 2020 has led to congestion in the Ethereum (Layer 1) network which has increased the gas fee for transactions. Due to this condition, normal users have to spend more and the speed of execution to make transactions has become slower. Read all about Blockchain here Link

Layer 2 Blockchain Solution

Layer 2 Blockchain also known as “off-chain” gives solutions for scale, privacy, and cost-effectiveness without sacrificing decentralization.

Ethereum able to process 15-20 transactions/second creates scalability issue in DeFi environment. Including high gas prices and fluctuating price of gas based on congestion was a need to identify a new solution.

Layer 2 platforms decrease the burden on the base layer (root chain). By offloading transactions from the base layer onto layer 2 platforms, the blockchain network can handle much higher transaction throughput thereafter.

Benefits of Layer 2

  • Still having Layer 1 serving as the security layer for data transactions making it immutable, cryptographically secured without a central authority.
  • Layer 2 massively reducing the data processing by running computations off-chain. 
  • Minimizing the data storage on the base layer.

Taking transactions from the base layer, while still anchored to it, would free up resources while still getting the decentralization benefits of Layer 1.

Collateral Loan on Smart Contracts

A collateral loan is a secured loan on the pledged collateral by the borrower to the lender for availing a loan. It makes sure that in case the borrower does not pay the loan on time, the lender can use collateral as a safeguard without taking any legal action.

Easyfi Network crypto layer 2 defi, 
types of collateral | the balance
 © The Balance 2018

Using Collateral Loan against crypto with certain conditions mentioned on the smart contract is Collateral Loan on Smart Contracts. Easyfi Network is the first to use the Collateral loan concept on Layer 2 solution and offering other product services related to the loan concept.

Product services offered by Easify

EasyFi (Version-1) started as a fork of Compound Finance. But unlike Compound Finance which runs on the Ethereum chain (Layer-1), Easyfi Network DeFi Lending Protocol runs on the Matic network enabling collateral-based secured loans on the Layer-2.

Product services offered by EasyFi Network DeFi Lending Protocol

​Micro-Lending

Microlending is the provision of small, low-interest loans to individuals and businesses.

Problem Statement: Billions of people around the world are being exploited by the massive interest rates by the local financiers and also people are not able to get quick loans.

Proposed Solution by Easyfi Network

  • EasyFi DeFi Lending Protocol intends to facilitate lenders offering undercollateralized loans of smaller value to borrowers with more meaningful interest rates.
  • Inherent risks of credit default and non-payment are shared by existing lenders in a proportionate manner. 
  • By spreading the risk across a large number of lenders it is ensured that the whole portfolio is not wiped out and loss is shared. 

Under collateralized Loans

Over collateralization is a barrier to entry consequently it’s important to mitigate market risks that arise from volatility and subsequent liquidation.

Problem Statement: Traditional financial markets have appropriate credibility assessment measures and corresponding facilitating institutions in place to establish the creditworthiness of a user. Defi lacks such standard benchmarking mechanisms due to a lack of access to data pertaining to users. 

Proposed Solution by Easyfi Network

  • Maintaining user data over a period of time to build creditworthiness and record any defaults or non-payment by the borrower. 
  • Using Koinfox TrustScore borrowers’ evaluation becomes easier for the disbursal of loans at the lowest possible collateralization ratio.

Credit Delegation 

Credit delegation can be understood as an agreement where the supplier knows the seeker and lends funds directly to the known borrower of choice. Therefore, we simply call credit delegation as ‘Know Your Borrower’ 

Problem Statement: A person with No Credit or Bad Credit can’t get a loan from the Institutions.  

Proposed Solution by Easyfi Network

  • Any two parties assessing the protocol can enter into a trusted agreement in which the depositor’s capital can be borrowed by the counterparty. 
  • Interest rates, loan terms, and covenants are baked into a delegation agreement and stored on-chain, providing an immutable point of reference for all parties involved.

Credit Default swaps (CDS)

Credit risks associated with default on loans can be transferred to third parties through derivative contracts. These agreements act as insurance as they allow investors to swap or offset credit risk with other investors.

Problem Statement: Loan suppliers not assured of the credit risk associated with loans can create panic among others in the network.  

Proposed Solution by Easyfi Network

  • EasyFi Network DeFi Lending Protocol will bring insurance to DeFi with the help of CDS which will enable the loan suppliers, especially those of a certain size, to be able to convert those loans into tradable assets and sell them to companies or investors customers who are willing to cover the risk. 
  • CDS will help in creating a money market for many passive income-based products backed by trusted loans making it less risky for the users.
  • EasyFi intends to automate the whole process through smart contracts and provide an efficient market for credit default swaps.

Conclusion

Easyfi Network is the first Layer 2 solution on DeFi Lending Protocol and it is getting very much appreciated in the blockchain and crypto world with strong partners MATIC (for Layer 2 on Ethereum), Koinfox (for checking Trust Score), and CHAINLINK (for tamper-resistant price feeds using Decentralized Oracle Network) supporting the Easify blockchain architecture. For more details refer to the whitepaper of easify.

References

https://golucidity.com/layer-2-blockchain-technology/
https://www.easyfi.network/

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