What Is Credefi (CREDI) And How Does It Work? | KuCoin Crypto Gem Observer

2021/12/07 10:00:12

The market for altcoins is booming, with over 100 new cryptocurrencies entering the market every day. Many of these currencies have tried to jump on the hype of memecoins such as DOGE and SHIBA, whilst others aim to bring innovative new technology and applications to the market.

Many cryptocurrencies are now accepted by global companies such as Starbucks and Lush, whilst El Salvador now uses cryptocurrency as legal tender. With so many new entries, it would appear the market is somewhat saturated. However, despite all the new cryptocurrencies, the best projects are continuously mentioned in the headlines. One such exciting project is Credefi (CREDI), which aims to change the world of crypto lending for small and medium enterprises (SMEs).

Credefi is the first cryptocurrency looking to solve the issue of loans in the SME market by creating a group of reliable borrowers for DeFi and reliable lending sources for SMEs. This solution resloves many of the issues surrounding the DeFi lending space, ensuring borrowers and lenders have a better experience. Here’s what Credefi aims to deliver.

What is Credefi?

Credefi is an innovative mix of DeFi protocol and FinTech solution connecting crypto lenders of stablecoins and SME borrowers. In the current market, SME borrowers and DeFi lenders are limited by several factors. These include inconsistent DeFi yields, high interest rates, and the lack of lenders needed to meet SME borrowing demand. The Credefi platform aims to solve this with decentralized and secure lending for a wide range of businesses and a fixed APY that isn’t linked to the crypto markets. This means less volatility for the same borrowing.

By ensuring SMEs have a reliable lending source and DeFi has reliable borrowers, the Credefi team believes they can change the world of DeFi borrowing. The cryptocurrency has already arranged a strategic partnership with an EU-accredited financial institution. This enables them to utilize real-world asset collaterals, easing the life of business borrowers. This has been combined with Credefi’s 3-layer protection mechanism to ensure maximum security for the lenders using the platform. This security combines an in-house proprietary credit scoring backed up by Experian - one of the Big Three credit-reporting agencies, crypto and real economy assets collateral, and Credefi’s security module (Module X), ensuring all users can borrow with peace of mind.

The team has also made deals as fair as possible. Prior to any deal, in-depth credit scoring and risks assessments are completed on every application. A rating is then given based on the data to help lenders and borrowers find the perfect balance.

Who created Credefi？

Credefi was founded by Ivo Grigorov and Valentin Dimitrov, two experts in the finance industry with vast experience in crypto.

Ivo is a Finance Specialist with experience in the banking industry. He specialized in the development and design of different financial instruments for both debt and equity. During this time, he built a diverse skill set, including Market and Credit Risk, Capital Adequacy, and Management. Ivo also has a Master of Science (MSc) in Global Banking and Finance from European Business School (EBS) and a proven track record implementing financial products. He first entered the blockchain market in 2016 and hasn’t looked back. Building on his experience, he believes crypto and blockchain will be the future of our financial systems.

Valentin is the Co-Founder of Credefi and has experience in both tech and finance. He’s worked at the European Parliament (ECON committee), VTB Capital, and as a Fund Manager of Financial Instruments in Bulgaria, in which he managed over €600 million. Valentin was an early adopter of Bitcoin and Ethereum, having developed an interest in crypto2013 whilst completing a degree at Bocconi University. He is also a technology enthusiast and has expertise in Cybersecurity matters, making him a major asset to the Credefi team.

How does Credefi work?

Credefi will offer its service in three different stages, starting with portfolio lending. During this stage, the Credefi ecosystem participants can lend stablecoins to portfolios. These portfolios range in risk from low to high and can be chosen based on the lender’s risk tolerance. The Credefi platform will provide risk assessment and credit score data to all lenders, ensuring they have the information they need to make an informed decision. All credit portfolios will then achieve an APY of 10% and above, depending on the risk involved.

The second stage of Credefi is project-based P2P lending. During this stage, Credefi will take full advantage of the decentralized capabilities of the blockchain, with a focus on peer-2-peer lending. The aim of this is to connect two parties and liberalize the process of lending and borrowing. At the same time, the platform will also provide zero-collateral loans on a case-by-case basis.

The final stage is trade finance, in which Credefi aims to combine traditional banking instruments with decentralization. This will allow Credefi to offer a broader range of services to its customers. This will include trade finance, in which lenders and borrowers will be able to meet in a deal and underwrite a Letter of Credit or a Letter of Guarantee.

What is the Credefi token and what is it used for?

The CREDI token is the native token of the Credefi ecosystem and serves multiple functions. Firstly, it will work as a rewards distribution token for lenders, with lenders receiving CREDI based on how much they’ve loaned out. It will also work as an additional security layer and will enable users to engage in different investment opportunities. Holders of the CREDI token will also benefit from higher APYs and borrowers holding CREDI eventually will be able to receive zero-collateral loans based on their on-chain behavioral patterns. CREDI holders will also have access to a selected pool of VIP projects and credit portfolios. Last, but not least, CREDI holders will be able to stake CREDI in Module X and mint Credefi’s governance and profit-sharing token CREDI.

The token itself will have a perpetual inflation rate of 5% per year. This will be based on the remaining supply of CREDI in circulation and will be split into two. More detailed information on how this will be split can be found in the tokenomics section of the Credefi whitepaper.

Closing Thoughts

With the gap between blockchain and traditional finance decreasing, Credefi could be the cryptocurrency we need to finally bridge the gap. Not only would this be great for the world of DeFi, but would also benefit SMEs looking for alternative sources of funding that the crypto market is presenting. Being the first cryptocurrency to release this solution, Credefi has the potential to completely revolutionize the way DeFi interacts with SMEs. With an experienced team backing it, this is a project you’ll definitely see in the future.

Finally, KuCoin will list Credefi (CREDI) and open the CREDI/USDT trading pair as a world premiere on December 9th.