What Is Pledge (PLGR) And How Does It Work? | KuCoin Crypto Gem Observer

2022/01/10 10:00:00

Usually, when we need a loan or financial help, we go to traditional financial institutions such as banks or even peer to peer lenders that offer these financial services. But lately, the financial world has experienced radical changes with the development of DeFi (Decentralized Finance).

DeFi is a financial form supported by blockchain technology and does not have a central financial middle person such as the banks, brokerage or exchange to provide the financial elements. Instead, DeFi employs self-executing smart contracts, mainly on the Ethereum blockchain.

With DeFi, anyone can become a borrower or a lender in an entirely non-permission and decentralized ecosystem whilst retaining complete custody of their crypto assets. DeFi Lending is accessible to anyone, and unlike traditional financial institutions, you don't need to entrust someone else the control of your assets and no personal details are required.

The main goal or driving force towards the advancement of DeFi is to build a permissionless, non-proprietary and clear financial services ecosystem open to everyone and not controlled by a central authority. The rise of DeFi lending has also led to an increase in lending marketplaces like Pledge. But first, what is Pledge, and how does it work?

What is a Pledge?

Pledge is a top-tier lending marketplace for Financial NFTs. Unlike other common DeFi projects, Pledge is moulded to enable the building of groundbreaking and collateralised lending products. These products include financial derivatives, refinancing and fixed interest rate swaps that will allow investors to create a heterogeneous portfolio customised to any level of risk exposure they believe they can handle.

Pledge offers several financial NFTs anticipating mass adoption and use of financial NFTs as a crucial component of the fixed income money market. Pledge strives to build a groundlaying technology and set up the infrastructure for the upcoming generation of open finance and DeFi. It capitalizes on the up to date blockchain technology, mainly the ERC 1155, to allow the making of NFTs to represent assets such as bonds, loans etc. Pledge loans begin with a fixed rate and time frame, most importantly knuckling down to attending to the borrowing needs of miners and whales, unlike other DeFi lending protocols that offer fluctuating loan rates for trades.

Pledge is designed for the international financial supply chain. There is a pressing need for financial institutions worldwide to exchange their credit and debit card obligations for low-cost financing and liquidity. Pledge strives to cater to this worldwide financial supply chain through its decentralized ecosystem. This is to be realized by developing a Financial NFT ecosystem that is interlinked across several chains.

Again, Pledge’s goals are unique from the rest. It seeks to be a platform that lends crypto assets to non-traders. It seeks to be at the centre of real-world application of crypto assets and diversification of crypto-asset holders portfolios to seamlessly include non-crypto assets such as real estate.

How does Pledge work?

Pledge uses a decentralized protocol that sets up lending markets with interest rates determined algorithmically. It provides its native token called PLGR, which is supplied based on the supply and demand laws. For that reason, a user can seamlessly trade the time of money derived from stable coins and collateralized digital assets.

Borrowers pay a foreseen and fixed interest, whereas PLGR holders get a fixed interest rate where earnings are accumulated per block called APY (Annual Percentage Yield). Alternatively, users can also be liquidity providers who can earn interests by providing capital in token liquidity pools.

Another good thing with Pledge is that a user can create multiple liquidity pools with diverse maturity for the particular crypto asset. Each asset can have its own distinctive transaction.

Pledge offers the most important component missing in DeFi, which is a fixed rate. Even the traditional financial market palace has fixed interest, and Pledge brings this component to the DeFi space.

Pledge has picked its lessons from existing DeFi projects for the past five years and has maximised the lessons to come up with a superior platform. A borrower can deposit crypto assets on a pledge as collateral. In return, they will be given a crypto asset holder who needs fiat liquidy can pledge their crypto assets on Pledge and be given a stable and predictable stable coin flow.

As for liquidity providers, they can lend or provide liquidity by locking the stable coins in the liquidity pools. They will receive a fixed interest rate plus their initial input after the loan matures. By cutting down the exposure to interest rate volatility, Pledge is poised to build a decentralized lending marketplace that will increase the mass adoption of DeFi.

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

PLGR is the Pledge Token, which provides a straightforward way for users to commit to value transfers. PLGR is a building block of the Pledge platform, which is transferable, hence facilitating liquidation, buying and lending purposes.

When a user buys or sells a PLGR they are simply transferring value from the present to the future. PLGR represents a claim which can be negative or positive. A negative claim is where a user is obliged to pay, and a positive claim represents an entitlement to receive.

Who created the Pledge?

The Pledge team comprises experts and experienced individuals, each boasting a successful track record from several fields. The team is led by Tony Y. Chan, a successful entrepreneur, and Nicole Chang, an ex Stanford GSB alumni president. Other notable members include Prof Sebastien Donadio from the University of Chicago and Prof Gregory Labanc, Faculty Director of Berkeley Fintech Institute. The team is well equipped and experienced to realize Pledge’s goal.

Closing Thoughts

Pledge is a game-changer in the Decentralized finance world, and it has the requisite tools and experienced team to guide it towards its primary goal is a powerful crypto-asset lending platform for non-traders. At this point, it is hard to ignore that the future is digital, especially in the financial world. Pledge also solves most of the problems currently facing DeFi, which is a significant step toward mainstream adoption of DeFi. Let’s wait and see how everything unfolds.

Finally, KuCoin will list Pledge (PLGR) and open the PLGR/USDT trading pair as a world premiere on January 12th.