Crypto borrowing is at the heart of the dynamics and opportunities offered by decentralized finance. Yet a sector that is far from mature, facing recurring shortcomings in liquidity, infrastructure, and audience.
Fuji DAO is a protocol aggregator that aims to remedy these problems. To make borrowing in DeFi more accessible, the company proposes an approach focused on minimizing costs for borrowers and bold communication.
The evidence of a strong expectation
Aggregators offering yield optimization related to “Yield Farming” are already commonplace in the cryptocurrency industry. It was only a matter of time before the concept made its way to the debt market.
The idea of a loan aggregator will be born in January 2021, during a meeting between three enthusiasts on ETHGlobal’s “MarketMake” hackathon. A contest that will quickly lead to a concrete and disruptive project. Guided by their intuition, Daigaro Cota, Boyan Barakov and Edgar Moreau will put as much energy into developing a reliable technology as a powerful communication.
Convinced that the best protocol is nothing without a community to support it, they opt for an active strategy on the group’s Twitter and Discord. An approach mixing the human and the technical that will soon attract several prestigious partners such as Delphi Digital, Origin Capital, Spartan and Maven 11.
Diluted risks and optimized profitability
Until now, with variable rates depending on the market, users who choose to borrow from the cheapest provider at any given time could see their maturities explode in seconds. In addition, managing a debit position requires time to monitor borrowing rates and resources to take appropriate action based on fluctuations, with sometimes high gas charges.
To address this, Fuji DAO has built the first loan aggregator stamped DeFi. A solution that aims to optimize borrowing costs through automatic refinancing of the entire debt pool, orchestrated by constant monitoring of the markets for the best rate.
Compared to a basic protocol, Fuji’s advantages are numerous:
- Lower interest paid by borrowers
- Lower transactional costs by pooling funds and sharing fixed costs
- Saves time with automated search for the best rates
- Ease of management for all debt positions from one clear and instinctive interface
- Peace of mind with a team available and active on the company’s various channels: Twitter, Discord and Medium.
Simplicity, efficiency, the keys to success
Fuji DAO distinguishes itself from the protocols it aggregates by the way it manages individual positions. Whereas Aave or Compound place liquidation risk on an entire borrower account, Fuji DAO offers isolated debt positions for each collateral/borrower pair. The separation of risks will allow for better risk management and efficient interest rate optimization.
In concrete terms, Fuji DAO creates safe deposit boxes in the form of smart-contracts in which users deposit a single asset as collateral. In return, they can borrow another asset. For example, in the ETH/DAI vault, users deposit ETH and borrow DAI.
When a user borrows from a Fuji vault, the liquidity always comes from the base protocol offering the best rate (Compound, Aave, dYdX, IronBank and others to come). A protocol that will keep track of the balance of individual positions and ensure the continuity of the entire vault through a classic liquidation mechanism.
If market conditions change and a provider offers a lower borrowing rate for a certain asset, Fuji triggers a rebalancing operation and automatically refinances the entire vault position. This way, users instantly get a better rate on their loans without needing to take any action on their end.
What was just a hackathon project at the beginning of the year is now a real working protocol and available in Alpha version. An authentic pioneer of the DeFi ecosystem, driven by a double objective: To offer crypto borrowing opportunities to a large audience, and to develop a strong and active community that will eventually evolve into an autonomous and decentralized organization.
