Introduction
Before the introduction of blockchain technology and cryptocurrency, there have been platforms that create a bridge between lenders and suppliers. These platforms provide a virtual meeting point that allows people who are willing to lend their assets to encounter those who need the money. These financial platforms make it easy and convenient for those who need a loan to comfortably access and pay back the loan within the stipulated time. Borrowers usually have the leverage of choosing any suitable lender that falls within the range of loan they need and the payback requirements. This entire process proved a viable means of easy and simple mode to get financial assistance, forming a peer-to-peer transaction and lending operations. However, there were certain drawbacks experienced in such systems such as delays in finding suitable markets or lenders and the matching process.
To resolve this challenge, blockchain technology, and decentralized systems were integrated into the lending platforms. This created a freeway movement and environment whereby there is a continuous supply of assets sent to a targeted pool, and this remains constant as much as there is never a drought of interest on the platform. Business experts and innovators identified that using blockchain and decentralization is key to eliminating the redundant delays, matching process, and waiting time.
It is through these advanced technologies that Smarts Finance, as decentralized finance (DeFi), is developing a lasting connection between suppliers and borrowers. The primary objective of this blockchain-based project is to make the borrowing and lending process simple and convenient for all their customers. The platform intends to achieve this by incorporating a non-custodial lending protocol, which will be launched on the platform. Smarts Finance creates passive income for lenders on their network through the provision of liquidity to a pool by saving the assets of the lenders in the token market. Subsequently, borrowers can access these monies in the market and borrow them after over-collateralizing their assets.
Suppliers
The structure of the platform ensures that suppliers (or lenders) can earn interest over time via their locked assets. However, the determinant of this passive income is the demand of the borrowers and the interests accrued from each transaction performed on the Smarts lending protocol and governed by fully audited contracts. Smarts Finance affixes a particular interest rate, which is consistently determined by the demand and supply of the market.
Let us consider the entire procedure of suppliers on the Smarts Finance platform. They receive Smarts Token (sToken), which is an equivalent amount of the total assets supplied to the pool and such supply is noted as their deposit. In conventional financial systems, the sToken may be seen as the receipt of a transaction; however, it is likewise a physical representation of the contract, as suppliers can trade them on secondary trading platforms that support the token. The platform also allows lenders to reclaim their deposits at any point, using their sToken. They also get to retain the interest accrued from the initial loan transaction. Smarts Finance instantly burns and removes the sToken once a withdrawal is completed. Due to the removal of delay time and maturity factor by the monitoring money market function, withdrawals are done instantly.
Smarts Finance also allows suppliers to borrow from the platform by using their locked assets as collateral. This is possible as long as the locked assets meet the collateral terms and requirements. Through this structure, long-term holders of a particular digital asset can have access to additional opportunities, where they can use their assets to perform transactions, trading, and other investment operations.
Borrowers
Without the presence of borrowers and their demand to access loans and financial assistance, there may never be a lending platform. Thus, the establishment of a liquid market makes it feasible to offer borrowers access to the required loans at any specific time. The basic requirement for borrowers to accessing these loans from a willing market is that they must have sufficient and suitable collateral at the point of request.
The structure of the borrowers’ process on the Smarts Finance platform is similar to that of the supplier. The representation of the collateral for loans will be an equal equivalent of sToken as the principal collateral entity, and for ownership verification on the network. This simply implies that the primary deposited fund qualifies to accumulate interest benefits for the supplier, which in turn creates the initial incentives to borrowers. Similar to the suppliers, the relationship between the market demand and supply determines the interest rate on the borrowed asset.
The markets under the Smarts Finance platform usually have a collateral factor. This factor, which is an integer value, regulates the exact amount of assets or funds allowed to be borrowed on the volatility of the asset and the current reputation and market presence. High volatile assets possess a bigger integer value while low volatile assets possess lesser value.
Two basic factors determine the threshold allowed to be borrowed by every account on the platform. These factors are the collateral factor of the borrowing assets and the entire underlying assets locked by an account. The management team of the network permits that every account can borrow money equivalent to the borrowing threshold, however, there is a restriction. The network does not allow accounts to exceed the threshold limit. More so, any account borrowing from the platform cannot perform a good number of services and operations until the borrowing period elapses. Some of these operations include the transfer of sToken, trading and exchanges, withdrawals, and redemption.
One significant feature of the Smarts Finance platform is that there is no specific schedule for the requirements of payback, neither are there terms influencing the amount and payment rate of the borrowed assets.
With the decentralized framework and blockchain technology on which the structure of the Smarts Finance is built, the network assures its users of quality service delivery and unparalleled support in accessing and providing loans on the network. The amazing benefits of the platform include a flexible process, transparency, an advanced security system, open lending operations, a trustless platform, and much more.
Useful Links
Website: https://smarts.finance/
Telegram: https://t.me/smartsfinance
Whitepaper: https://smarts.finance/assets/documents/WhitePaper.pdf
Discord: https://discord.com/invite/rertF5a
Twitter: https://twitter.com/Smarts_finance
Medium:https://medium.com/@smartsfinance
YouTube: http://www.youtube.com/channel/UCp58Zt6o88nj9jH8tKtvzSw
Writers Info
Bitcointalk Username: Onyiiok
Bitcointalk Profile Link: https://bitcointalk.org/index.php?action=profile;u=2766257
Proof of Authentication: https://bitcointalk.org/index.php?topic=5290318.msg55634331#msg55634331