There are many aggregation protocols for decentralized exchanges and efficiency optimization. However, practical lending aggregators focusing on cost minimization for borrowers still do not exist. In fact, the borrowing markets in DeFi are still maturing and the infrastructure that facilitates the market is still being built. Fuji Dao is an infrastructure protocol that integrates cryptographic lending and borrowing markets into blockchain networks and has embarked on a mission to solve this problem. This article is about learning how to work with the Fuji DAO a platform that aims to be a part of this construction process, with the ultimate long-term goal of making DeFi borrowing available to more users. The idea of ​​aggregating Fuji Lending was born during the ETHGlobal "MarketMake" hackathon in January 2021. This is where the founders of this platform met.

Blockchain technologies have been evolving since the inception of Bitcoin in 2009. Through the evolution of blockchain technologies and the emergence of Turing-complete programming languages ​​on the blockchain (such as the Ethereum Virtual Machine, EVM ), a set of applications have been developed that replicate the traditional financial industry. The main business of these financial programs is the ability to perform transactions of any size and almost instantaneously, through untrusted and unlicensed software code called smart contracts. These financial programs allow anyone with digital currency to access primary and sophisticated financial instruments on decentralized networks. The collection and network of all these financial programs on the blockchain are usually called decentralized finance or defi for short.

Loan/loan protocols are a type of financial program within DeFi. They allow anyone who owns a crypto asset to lend and borrow the same or different crypto assets. The first lending protocols for crypto-assets operated as peer-to-peer systems, facilitating secured and unsecured loans directly between market participants. However, these peer-to-peer lending protocols were limited because users had to manage different aspects of each loan term individually, which critics found to be tedious for the average user.

The hybrid protocol was implemented in 2019 and introduced an algorithm automatically setting floating interest rates for lenders and borrowers based on supply and demand. The hybrid protocol algorithm allows users to make a profit by offering their crypto assets and borrowing them, "without having to negotiate terms such as maturity, interest rate, or collateral with a peer or counterparty," In this way, the introduction of the composite protocol and its simplified method for defining interest rates led to the acceptance of more users in the lending space.

After the introduction of composite protocols, many similar lending protocols followed suit. Including the Aave protocol, which was renamed from a peer-to-peer lending system previously known as EthLend. At the time of writing, Compound and Aave represent the two largest lending marketplaces with over $25 billion in total locked-in value ( TVL ) in crypto assets. However, there are more than half of the lending protocols with large enough pools. All of these protocols manage a similar pool of crypto-assets and their interest rate models differ slightly in the setting parameters but similarly adapt to changes in supply and demand.

The existence of different lending/lending protocols for similar crypto sets on the same or different blockchains and the constant fluctuation of interest rates due to supply and demand create arbitrage opportunities. On the other hand, users must constantly monitor the markets and transfer funds from one protocol to another if they want to profit from differences in interest rates. Considering the time and fees of network transactions, such work can be inconvenient and expensive for most of them. This creates favorable conditions for developing optimization strategies for loan yield and cost.

Aiming to facilitate borrowing/lending for DeFi users, the Fuji DAO platform was designed to consolidate lending markets with a primary focus on minimizing the cost of borrowing. By creating a system that monitors interest rates, the protocol directs transactions to the lowest rate and rebalances debts in different protocols on or off different blockchains in a constant search for lower interest rates. gives and in this way gives value to the user. A similar mechanism that may be implemented in the future could be used to maximize lending rates by rebalancing liquidity in the loan/debt markets.

The Fuji DAO platform is built to make life easier for borrowers. It continuously monitors the borrowing market and automatically refinances the debt pool at the best rate.

Using the Fuji DAO platform instead of a base protocol has many advantages:

Cost optimization reduces the interest of borrowers. Economies of scale of borrowing pools minimize transaction costs by dividing fixed costs. Not having to search for the best interest rate saves time for the user. This app makes debt management easy on one platform.

The Fuji DAO platform creates a warehouse where a user deposits an asset in exchange for another asset. For example, in an ETH/DAI fund, the borrower receives some ETH as collateral for the deposit and some DAI. Therefore, the separation of debt positions allows for better risk management and the most effective optimization of interest rates.

When a loan is contracted from the Fuji Fund, the necessary liquidity is provided directly from the base protocol at the best rate. Among them, you can find Compound, Aave, or IronBank protocols. Other protocols and blockchains will be added in the future, for example, the recent collaboration with the Fantom blockchain ( FTM ) which has 3 liquidity providers (Geist, Scream, and IronBank) as well as 3 new funds (FTM/DAI, FTM/ USDC, BTC/DAI).

The Fuji DAO platform tracks each users’ position and ensures treasury health through traditional liquidation mechanisms. To avoid liquidation, the borrower must keep the debt ratio in the security deposit he/she has provided within a certain threshold.

When the market fluctuates and a liquidity provider has a lower interest rate for the asset, the Fuji Dao protocol automatically initiates a rebalancing operation and refinances the entire fund position. This means that users get a better interest rate on their loans instantly without any action required.

Conclusion

The Fuji DAO platform is a platform that allows borrowers to minimize the cost of borrowing and makes it easier to manage. Access to this platform facilitates borrowing in decentralized finance and saves time for its users. This project is a pioneer in its field and will help democratize lending in the world of digital currencies. The future of the project seems to be clear, as the addition of new platforms and blockchains in the future could improve the diversity of Fuji DAO's offerings as well as its appeal.

There are many aggregation protocols for decentralized exchanges and efficiency optimization. However, practical lending aggregators focusing on cost minimization for borrowers still do not exist. In fact, the borrowing markets in DeFi are still maturing and the infrastructure that facilitates the market is still being built. Fuji Dao is an infrastructure protocol that integrates cryptographic lending and borrowing markets into blockchain networks and has embarked on a mission to solve this problem. This article is about learning how to work with the Fuji DAO a platform that aims to be a part of this construction process, with the ultimate long-term goal of making DeFi borrowing available to more users. The idea of ​​aggregating Fuji Lending was born during the ETHGlobal "MarketMake" hackathon in January 2021. This is where the founders of this platform met.

Blockchain technologies have been evolving since the inception of Bitcoin in 2009. Through the evolution of blockchain technologies and the emergence of Turing-complete programming languages ​​on the blockchain (such as the Ethereum Virtual Machine, EVM ), a set of applications have been developed that replicate the traditional financial industry. The main business of these financial programs is the ability to perform transactions of any size and almost instantaneously, through untrusted and unlicensed software code called smart contracts. These financial programs allow anyone with digital currency to access primary and sophisticated financial instruments on decentralized networks. The collection and network of all these financial programs on the blockchain are usually called decentralized finance or defi for short.

Loan/loan protocols are a type of financial program within DeFi. They allow anyone who owns a crypto asset to lend and borrow the same or different crypto assets. The first lending protocols for crypto-assets operated as peer-to-peer systems, facilitating secured and unsecured loans directly between market participants. However, these peer-to-peer lending protocols were limited because users had to manage different aspects of each loan term individually, which critics found to be tedious for the average user.

The hybrid protocol was implemented in 2019 and introduced an algorithm automatically setting floating interest rates for lenders and borrowers based on supply and demand. The hybrid protocol algorithm allows users to make a profit by offering their crypto assets and borrowing them, "without having to negotiate terms such as maturity, interest rate, or collateral with a peer or counterparty," In this way, the introduction of the composite protocol and its simplified method for defining interest rates led to the acceptance of more users in the lending space.

After the introduction of composite protocols, many similar lending protocols followed suit. Including the Aave protocol, which was renamed from a peer-to-peer lending system previously known as EthLend. At the time of writing, Compound and Aave represent the two largest lending marketplaces with over $25 billion in total locked-in value ( TVL ) in crypto assets. However, there are more than half of the lending protocols with large enough pools. All of these protocols manage a similar pool of crypto-assets and their interest rate models differ slightly in the setting parameters but similarly adapt to changes in supply and demand.

The existence of different lending/lending protocols for similar crypto sets on the same or different blockchains and the constant fluctuation of interest rates due to supply and demand create arbitrage opportunities. On the other hand, users must constantly monitor the markets and transfer funds from one protocol to another if they want to profit from differences in interest rates. Considering the time and fees of network transactions, such work can be inconvenient and expensive for most of them. This creates favorable conditions for developing optimization strategies for loan yield and cost.

Aiming to facilitate borrowing/lending for DeFi users, the Fuji DAO platform was designed to consolidate lending markets with a primary focus on minimizing the cost of borrowing. By creating a system that monitors interest rates, the protocol directs transactions to the lowest rate and rebalances debts in different protocols on or off different blockchains in a constant search for lower interest rates. gives and in this way gives value to the user. A similar mechanism that may be implemented in the future could be used to maximize lending rates by rebalancing liquidity in the loan/debt markets.

The Fuji DAO platform is built to make life easier for borrowers. It continuously monitors the borrowing market and automatically refinances the debt pool at the best rate.

Using the Fuji DAO platform instead of a base protocol has many advantages:

Cost optimization reduces the interest of borrowers. Economies of scale of borrowing pools minimize transaction costs by dividing fixed costs. Not having to search for the best interest rate saves time for the user. This app makes debt management easy on one platform.

The Fuji DAO platform creates a warehouse where a user deposits an asset in exchange for another asset. For example, in an ETH/DAI fund, the borrower receives some ETH as collateral for the deposit and some DAI. Therefore, the separation of debt positions allows for better risk management and the most effective optimization of interest rates.

When a loan is contracted from the Fuji Fund, the necessary liquidity is provided directly from the base protocol at the best rate. Among them, you can find Compound, Aave, or IronBank protocols. Other protocols and blockchains will be added in the future, for example, the recent collaboration with the Fantom blockchain ( FTM ) which has 3 liquidity providers (Geist, Scream, and IronBank) as well as 3 new funds (FTM/DAI, FTM/ USDC, BTC/DAI).

The Fuji DAO platform tracks each users’ position and ensures treasury health through traditional liquidation mechanisms. To avoid liquidation, the borrower must keep the debt ratio in the security deposit he/she has provided within a certain threshold.

When the market fluctuates and a liquidity provider has a lower interest rate for the asset, the Fuji Dao protocol automatically initiates a rebalancing operation and refinances the entire fund position. This means that users get a better interest rate on their loans instantly without any action required.

Conclusion

The Fuji DAO platform is a platform that allows borrowers to minimize the cost of borrowing and makes it easier to manage. Access to this platform facilitates borrowing in decentralized finance and saves time for its users. This project is a pioneer in its field and will help democratize lending in the world of digital currencies. The future of the project seems to be clear, as the addition of new platforms and blockchains in the future could improve the diversity of Fuji DAO's offerings as well as its appeal.