Most decentralized finance (DeFi) lending protocols use variable interest rates, which can create uncertainty for users regarding their capital costs and investment returns. To address this situation, the BenPay ecosystem has launched BenFi, a peer-to-peer (P2P) lending protocol that offers a fixed-rate option.
BenFi's mechanism operates by centrally matching deposit and borrow orders within specific cycles and setting a fixed interest rate for all orders that are successfully matched within that cycle. This allows users to know the interest rate for the cycle at the outset.
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Depositors: Can deposit BUSD assets to earn interest that is fixed for the duration of the cycle.
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Borrowers: Can collateralize BTC assets to borrow BUSD at a fixed interest rate, thereby gaining liquidity without selling their BTC.
Product Features
1. Fixed-Rate Mechanism BenFi's main feature is its fixed interest rate. Once an order is successfully matched in a matching cycle, its interest rate will remain unchanged throughout the entire cycle, unaffected by market interest rate fluctuations. This provides a clear expectation for calculating investment returns and borrowing costs.
2. Periodic Matching Model BenFi uses a periodic matching model to match orders. The system gathers all deposit and borrow orders within a cycle and matches them according to public rules.
3. Decentralized Architecture BenFi is built on blockchain technology, with funds managed by smart contracts. All transaction records are public on the blockchain and can be traced.
4. Integration with the BenPay Ecosystem BenFi is part of the BenPay ecosystem. Users can log in directly and use BenFi with their BenPay accounts without needing to create a new account.
Primary User Scenarios
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BTC Asset Holders: Those who need short-term liquidity but do not wish to sell their BTC can borrow BUSD by staking BTC.
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Stablecoin Asset Holders: Those who wish to earn a fixed interest income can deposit BUSD as lenders.