Kudo’s Treasury Lending – Bitquity
Currently in the DeFi ecosystem, there is a huge gap in the market for commercial lending. This comes as quite a shock, as any seasoned economist would know that lending is what “drives the wheels” of the economy. Without it, the market suffers, as projects and businesses are slowed or even crippled by the lack of available funds. This is already reflected in the DeFi ecosystem, where mid to small cap on chain companies and NFT artists currently often do not have access to sufficient credit or working capital to develop. Institutional investors too, face difficulties in participating in DeFi due to the risks involved from the lack of KYC/AML that persists in many of the projects. A large gap in the market is therefore evident for a DeFi debt financer, which would assist both the borrower and the investor.
This is where Kudo Money comes in. Bitquity, Kudo Money’s Treasury Lending platform, fills this gap in the market by providing debt financing and working capital for organisations and individuals such as ICO companies and NFT artists. Entities can receive loans by either putting up their own native tokens or NFTs as collateral. This is particularly helpful for Blockchain start-ups who will no longer need to sell tokens to fund project development, but instead can take a Bitquity Loan. Institutional investors too, who previously may have been reluctant to participate in the DeFi space, will now have peace of mind, as Kudo pools will provide secure portals and support whitelists of approved participants. Therefore, Kudo has potential for huge future growth as it fills a real gap in the market by providing benefits for numerous different stakeholders. This sets itself up to be a truly integral component of the DeFi ecosystem.
Kudo Money’s Bitquity essentially acts as an improved replacement for banks, with corporate and institutional borrowers accessing debt financing from Liquidity Pools. These pools allow Borrowers to access credit, as well as Liquidity Providers to access the Kudo loan book, rewarding them with risk adjusted returns. This is therefore beneficial for both parties – especially for the Borrowers, as they won’t just be paying fees, but also earning fees as well, just like the token holders and participants. In many ways, Bitquity is better than standard banks as it discards the many disadvantages they usually have. There will be no more inefficient middlemen, waiting for working office hours, and obnoxiously high clearing prices. Therefore, Kudo Money’s Bitquity is an extremely innovative product benefitting both lenders and borrowers, with a real-world use case and the possibility of widespread adoption in the future.
The example of Yearn’s recent vault hack illustrates the extent of the demand for the Kudo Treasury lending product. To pay for the hack, Yearn had to borrow Stablecoins against $YFI – something most protocols wouldn’t be able to do since they are not listed on Aave or Compound. Kudo Money makes this accessible for all Blockchain companies, not matter how big or small, and grants them the ability to borrow working capital without needing to sell their native token. The example of Yearn therefore helps cement Kudo Money’s case for future widespread adoption, as it reveals Bitquity has the ability to solve a huge issue in the DeFi space – access to capital.
Kudo’s Risk and Interest Rate Benchmark
Interest rates for the loans will be determined with the Kudo benchmark, which will be smart contract-based and judged on numerous factors such as token collaterals and the Kudo Credit data. This will make interest rates very fair, especially because it is based upon the Kudo risk evaluation framework which is extremely detailed and assigns firms a credit score – ranging from D to AAA. Investors, therefore, will have a full picture of the risks for the firm they are providing liquidity for and therefore comprehensive knowledge of the securities they are buying into.
Kudo’s Open Money Markets
What is particularly special about the Kudo platform is the access to open money markets. Currently, one of the biggest issues with yield farming is the fact that you can only earn yield on stable coins and Eth. Kudo fills this gap in the market, as it allowed users to post any asset as collateral to borrow any supported asset which would then earn yield automatically. The pools will then rebalance this exposure depending on the value of the collateral, so users are protected from liquidation. Moreover, Kudo allows anyone to create pools of assets which become their own money markets – creating a market of money markets! Each pool will then be backed up with its own collateral requirements, interest curves, oracles, and even their own whitelist of participants. This is a hugely innovative concept, which allows users to lend and borrow crypto with ease whilst expanding the outreach and potential market share for the Kudo platform.
Summary
Overall, Kudo Money is a hugely innovative project with its products having potential for huge widespread adoption in the future. Kudo’s Treasury Lending coupled with its Interest and Risk Benchmark solves a real problem in the crypto space, benefitting both Borrowers and Lenders alike. This is further supported by Kudo’s Open Money Markets which will only work to increase its outreach and market share in the future. Overall, due to the sheer number of advantages the Kudo Money platform offers, it will likely play a crucial role in the DeFi revolution and therefore became an integral component of the DeFi ecosystem.
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