Introducing Atomic Repayments: Repay using collateral

Fringe Finance
3 min readNov 7, 2023

Decentralized finance (DeFi) lending and margin trading platforms have been gaining traction in recent years due to their ability to provide individuals with a new way to borrow and lend cryptocurrencies and undertake leveraged trading. One of the latest innovations from Fringe Finance for our Fringe V2 lending and trading platform is the introduction of atomic loan repayments whereby loans and trading positions can be repaid using the user’s collateral, which offers a range of benefits to users.

Atomic repayments, the benefits

With atomic loan repayments, users can repay their loan and margin trade positions using the position’s collateral and therefore do not need to have the borrowed funds separately available to repay the position. This feature offers significant convenience for Fringe Finance users increasing their options for repaying loans and trading positions.

Previously, users had to manually repay their loans, which involved obtaining the borrowed assets separately and then transferring them back to the lending and margin trading platform. This process was time-consuming and added friction for users. However, with atomic loan repayments, the process is automated, making the process easier for users and reducing associated fees.

Another benefit of atomic loan repayments is that users do not need to hold onto borrowed assets, which can be risky in a volatile market. By using the position’s collateral to repay the loan, users can reduce their exposure to price fluctuations and limit their currency risk.

How does the atomic repayment process work

So how does the atomic repayment process work? The mechanism behind atomic repayments is relatively straightforward. A third-party decentralized exchange (DEX) is used to swap the collateral for the borrowed assets needed to repay the loan or leveraged margin position. The DEX provides liquidity for the trade, ensuring that the user can repay their loan regardless of market conditions. This process is called an atomic repayment because it happens atomically in a single, uninterrupted transaction.

In terms of user experience, all the user needs to do is specify “Repay using collateral” when repaying a loan and Fringe does all the rest. The user is presented with the price impact they will experience from the third-party DEX so that the user has full control to proceed or not — which is important if the asset has low liquidity in external markets. See the screenshot below:

Atomic repayments on the Margin trading platform

In addition to facilitating loan repayments, atomic repayments also make leveraged trading much more accessible. If the user wishes, our Amplify and Margin Trade leveraged trading facilities employ atomic repayments to close positions. With traditional margin trading, users must obtain or hold onto the borrowed assets until they close out their position, which can be risky in a volatile market. However, with atomic repayments, users close out their margin trade positions without needing to worry about holding or obtaining borrowed assets. This makes margin trading more accessible, making it a more attractive option for users.

Conclusion

In conclusion, the atomic loan repayment feature is another example of the continuing innovation in the Fringe Finance ecosystem, offering a range of benefits to users. By removing the need for users to hold borrowed assets, atomic repayments make interacting with the Fringe ecosystem more accessible. Innovations like this are designed to further differentiate Fringe from competitors, to bring our users joy, and to promote adoption.

Fringe Finance. DeFi for everyone.

About Fringe Finance

Fringe Finance is a decentralized money market designed to unlock the capital spread in crypto assets regardless of their capitalization and supported network. With a next-generation DeFi lending & borrowing ecosystem, Fringe aims to unlock the dormant capital from traditional financial markets and all-tier cryptocurrencies.

More information on Fringe Finance:
Website — https://fringe.fi
App — https://app.fringe.fi
Twitter — https://twitter.com/fringefinance
Telegram channel — https://t.me/fringefinanceANN
Telegram group — https://t.me/fringefinance
Debank — https://debank.com/official-account/112694

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Fringe Finance

Decentralized financial ecosystem unlocking the dormant capital from traditional financial markets and all-tier cryptocurrencies. #DeFi lending & borrowing.