Recap: Fringe Finance’s AMA in Chainlink’s Community Channel
Last week, team members Konstantin Shirokov and Carlos Cano visited Chainlink’s Community Telegram to discuss Fringe Finance with its users.
The following is a transcript of the Questions asked both by the moderators of the chat and Chainlink’s community, as well as the answers by our Marketing and Content Managers:
How does Fringe Finance work?
Konstantin: Fringe intends to address the issue of DeFi’s lack of infrastructure for “smaller” projects. While the most popular currencies, like Ethereum and wBTC, receive lots of attention from protocols, dozens more altcoins face a worrying lack of support. Fringe is a lending and borrowing platform for those underserved by the DeFi ecosystem, to present their holders, community, and the protocol runners themselves, with increased opportunities.
The altcoin market Fringe is aiming to serve is already estimated at 100 billion dollars, and will continue to grow as new projects come into the space.
We will be launching two different products: A Primary Lending Platform and a USB stablecoin platform
The Primary Lending Platform allows users to borrow enabled stablecoins against their altcoins, while the USB platform users can mint Fringe’s own USB stablecoin against their altcoins.
What makes Fringe Finance special?
Carlos: There is a couple of innovations that we’re bringing to the market with the launch of our Primary Lending Platform.
I’d mention that we’re introducing:
🔹 Access to the money markets to assets that previously lacked a utility in DeFi.
🔹 A tier system to the DeFi lending\borrowing landscape.
🔹 A new funding model for crypto projects, with the ability to take loans against their Treasuries.
How do Fringe Finance and Chainlink work together?
Konstantin: Chainlink is the most important decentralized oracle network in the blockchain industry, and its price feeds are tamper-proof, high-quality, and production-tested. They are also available directly on-chain in a truly dependable way, and node operators are autonomous and security-reviewed. Fringe calculates altcoin collateralization and liquidation ratios for stablecoin loans in real-time using Chainlink’s price feeds, so they’re vital to our protocol’s design.
What is the best way for someone to get started with Fringe Finance today?
Carlos: Right now, users are at a great stage to jump in from Day 1, as our platform is still in Testnet phase. You can see the instructions to participate in here and jump on the #DeFi4Everyone train! However, please note that the Testnet is still from before rebranding, so it’s under our previous name, Bonded Finance. We’re so close to launching that we just decided to run with it as-is!
You can see the instructions to participate in here.
What’s next on Fringe’s roadmap that we may expect soon?
Konstantin: Fringe Finance is currently in Testnet stage, launched at the end of 2021. We’re being audited by two companies, Hashex and CyberUnit, a unique feat in the DeFi community. After the results of the audit are published, we’ll be ready to kickstart the platform. There is also underground work to attract the projects whose tokens will be available on the platform as collateral. We’ve been successful at this so far, with 16 partners whose cumulative capitalization exceeds $27 billion. The list includes heavyweights like Polygon, Chainlink, REN, Elrond, and recently IoTeX and will continue to expand.
In the short term, we want to launch our Mainnet, become the best DeFi platform on security terms, and list many more assets. Long term, we want holders of low-cap altcoins to be able to use all kinds of instruments of the DeFi ecosystem and gain solid profit for $FRIN stakers.
Where can the audience follow Fringe Finance and stay updated?
Carlos: You can visit Fringe Finance at fringe.fi and you can find all the necessary links at https://linktr.ee/FringeFinance.
How does Fringe use Chainlink price feeds for assets that don’t have one yet?
Konstantin: We’re working with Chainlink on opening new price feeds for the assets that currently are not presented. The most recent case is IoTeX, whose ERC-20 price feed was established by our request.
How can price stability be achieved on illiquid coins that fluctuate a lot?
Konstantin: Chainlink has a set of minimum threshold parameters for which they will establish a price feed, so we will not have illiquid coins’ feeds provided by them.
In what ways (if any) have the Chainlink and Fringe teams collaborated in the development of the upcoming Fringe PLF and related oracle solutions to serve the platform?
Carlos: I have to say that the Chainlink team has been absolutely amazing in explaining to us the difference between the many types of feeds and helping us build the ones we need for some of the assets we’re aiming to list as collateral types. They are a huge team and look deep into things, which I can only say is overall bullish for their use case in the crypto scene.
How will teams be able to take loans out on treasury tokens? Is it different than for retail borrowers?
Konstantin: No, the projects will follow the same procedure. For our protocol, there is no difference to whom the wallet belongs. So basically they put treasury, receive the amount of fTokens representing their share and take a stablecoin loan not exceeding this amount.
Team treasuries can be huge, what if a liquidation event occurs and the liquidity isn’t enough to mitigate the loss?
Carlos: Even in the event of a liquidation, any user has a chance to claim back part of their collateral, so it wouldn’t be a complete loss.The platform doesn’t aim to optimize for liquidations, as they’re expensive in the Ethereum network.
We’re also introducing a concept similar to lines of credit (borrowing capacity) so lenders can always have greater lines of credit than the loans they undertake, hedging against this issue. Of course, any loan requires active management, so it’s up to a project to make sure their loan stays healthy.
Which crosschain solutions will Fringe offer? On which chains will the platform be launched?
Carlos: Initially, we will deploy on the Ethereum Mainnet as a first step to then go on and conquer other chains. This doesn’t get talked about as much, but other chains make huge trade-offs either in security and decentralization, and Fringe aims to start in the safest, most decentralized network before expanding.
Eventually, we aim to add cross-chain integrations through all of the aspects of lending so, for example, people will be able to take out a loan in one chain and pay it back on the other, or withdraw their coins with collateral they added on another chain.
How does fringe protect the users from a hack in the platform? Does it provide insurance?
Carlos: We do! We’re looking into providing insurance throughout our platform thanks to our partners at Union Finance. We take security quite seriously, as you can see from the double audits, and this is just an extension of it. We think these solutions need to become more mainstream before DeFi reaches institutions and the masses.
Roughly how many assets do you anticipate will be available to borrow/lend upon platform launch? And will they be in different tiers, or all top tier to begin?
Konstantin: We’re planning to gradually add assets to the platform, starting with the projects with the most liquidity. All of the assets of our partners who are on ERC-20 will be added to the platform.
And after the launch of the USB platform, we will also integrate lower-tier assets fulfilling our vision of DeFi for everyone.
Will Chainlink deposit value onto Fringe?
Carlos: We do not have full confirmation from the team about this but, obviously, this is a conversation that we’re always having with partners. I’m sure, however, that this will get more and more tempting for projects like Chainlink that can access additional capital without selling their tokens and dumping on their community by taking a loan. We think this approach is much more effective and it demonstrates commitment towards a community.
Will $USB only be backed by trustless assets or will you still be able to mint it w/ semi-trustless assets, such as USDC/USDT/etc?
Konstantin: Our desire is definitely to offer the market a genuinely decentralized stablecoin. It is impossible if the assets that are backing it are centralized.
We’re closely watching the current situation with regulation and will try to mitigate those risks for our holders, both in terms of providing decentralized UI, moving the management of the protocol to a DAO and using only decentralized assets as the collateral for USB!
How far along are the tiered oracles for high risk assets?
Konstantin: We do not use tiered oracles. Tier implementation is done on our side and by our thresholds.
How are more volatile assets handled?
Carlos: With higher collateralization ratios. More risk means you need more collateral, and this is in your own interest. You do not want to get liquidated easily because Mainnet transactions are expensive!
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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.