Origins
The modern financial system began in the distant past with the appearance of commodity relations between our ancestors. At first it was barter. People exchanged goods of their own production, but over time, this form of exchange became inconvenient and impractical. Since it was often difficult to assess the equivalence of the transaction. So people started looking for an alternative to barter.
Thus, in different parts of our planet, universal values appeared, which made it possible to buy or sell any product. Rare shells, glass beads, bird feathers, stones, animals, and grain acted as a universal unit of exchange. But over time, all these items lost their value, so they were not unique and were not rare enough.
The rise of gold and silver initiate a new financial era. The development of new monetary relations began in all corners of the planet. States began to develop the release of their own coins made of gold and silver. Then the first banks and banking system began to occur.
The modern banking system has gone far in its development from the beginning of its creation, but the mechanism of operation and the main goal remain unchanged - to become richer and more powerful.
Alternative
At first glance, the emergence of the banking system contributes to the development of the country's economy and the well-being of its inhabitants, but in fact, people's savings and deposits are not in a very favorable position, which are often suffer inflation, are not protected from economic crises and bank failures.
But Bitcoin appears in 2009 as an alternative to the modern banking system. And over 10 years of the existence of cryptocurrencies faciliate a rapid development of a new economic model of digital assets. A lot of new projects appear that are direct competitors to centralized financial institutions, namely banks. And one of these projects is Parallel Finance.
The birth of the gem
Information about the Parallel Finance project appeared in 2021, when the founder of the company Yubo Ruan raised investments of $ 2 million from such huge funds as Alameda Research, Polychain, Pantera Capital, 8 Decimal, Lightspeed, Breyer Capital, Web3 Foundation, Hypersphere, Halborn.
Parallel Finance offers margin staking, auction loans and derivative AMM curve to improve capital efficiency for DOT and KSM holders.
Margin staking
The essence of margin staking is that users can borrow and stake their assets at the same time. This function is especially useful when the user stakes his DOT or KSM, but wants to increase his profit by making trades. Therefore, it is possible to borrow and trade, doubling your profits. Thus, a kind of alliance arises between the stakers and the lenders.
Insured staking
Proof-of-Stake blockchains use slashing to avoid stimulating bad node dynamics. Users who have nominated slash validators also suffer from this issue. Therefore, Parallel Finance protects against such risks by charging a small commission to each user who stakes and reallocates this commission in case of slashing. A specially created validator algorithm is responsible for this actions, which selects the highest performing nodes, thereby simplifying the interaction of users with the platform.
Predictive yield curve
One of the most important innovations on the Parallel Finance platform is a more efficient curve for interest rate tokens like xDOT, xpDOT, cTokens. This curve uses the future value of interest-bearing tokens, which reduces slippage to zero. This allows you to simulate high liquidity on every swap. It also gives users the ability to change percentage positions and exit them with the highest possible value.
Parallel Finance also uses a three-sided pool instead of two-sided AMM pools, where the first consists of a native token, the second consists of a percentage token, and the third is a stability reserve. The stability pool works by insuring slippage on the AMM curve. Parallel Finance can insure slippage for swaps that use up to 1/6 of the pool. Swaps that use more than this percentage will receive slippage.
Auction loans
Projects interested in sourcing DOT and KSM for their parachain crowdloans will be able to use Parallel as an unauthorized coordination level to request fixed or floating rate loans and incentivize contributions themselves.
Parallel Finance will also address the liquidity problem for users who have locked their DOT and KSM for crowdloans by offering the option to tokenize deposits as buyable shares to keep depositors liquid for the duration of the deposit.
Conclusion
From all of the above, we can conclude that the Parallel Finance project has a huge potential for development and will be very popular and successful among its users, as well as among projects that want to launch their own parachains. I really like the project as it will be an integral part of the Polkadot and Kusama ecosystem.
You can join the crowdloan whitelist today by clicking HERE.
More details about the mechanism of the platform and additional information about the project can be found in the official whitepaper.
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