The advent of blockchain technology and cryptocurrency has laid the foundation for many new and innovative projects. Major among them was a decentralized financial system, an emerging financial system that utilizes blockchain and cryptocurrency to provide direct peer-to-peer transactions. Though the DeFi system has shifted the perspective of financial trade, it is vulnerable to hacks and thefts, limiting the platforms’s use case.
To address the issue, especially in small business firms and associations, a new system called Credefi has been launched. Continue reading the article to learn more about the landscape of the emerging Credefi platform.
Table of content
- What is Credefi?
- How does Credefi work?
- How does Credifi Connect DeFi with TradFi?
- What is CREDI?
- How to buy CREDI?
What is Credefi?
Credefi is a decentralized blockchain platform that connects crypto traders with small and medium enterprise (SME) borrowers. By creating a bridge between decentralized finance and traditional finance, Credefi aims to solve the existing circumstances of the DeFi platform including shaking DeFi returns, high interest rates, and low number of lenders.
It acts as a reliable platform for lending and borrowing and offers promised returns without being impacted by the volatility of the crypto market.
How does Credefi work?
Credefi is not similar to other decentralized finance platforms, they offer unique functionalities and cater their service in three stages including portfolio lending, project-based P2P lending, and trade finance.
- Portfolio lending: In this stage, users lend stablecoins to their portfolios. The portfolios are categorized by level of risk, from high risk to low risk. The Credefi platform helps lenders to analyze risk and monitor all the associated data. Lenders choose the portfolio according to their risk tolerance. Depending on the level of risks involved, all portfolios (credit) will attain an annual percentage yield of approximately 10%.
- P2P lending: In the peer-to-peer lending stage Credefi utilizes the decentralized nature of blockchain technology to ensure direct peer-to-peer service to the users. The decentralized approach ensures a direct connection of users to engage in lending and borrowing activities without the involvement of a third party. Apart from lending, the platform also offers collateral loans for its users.
- Trade finance: By combining traditional finance with decentralization, the Credefi platform offers barrierless lending and borrowing services to a large number of users. This stage creates an opportunity for lenders and borrowers to meet and make a deal and also can underwrite agreements like a Letter of Guarantee or Letter of Credit.
How does Credifi Connect DeFi with TradFi?
Credifi acts as a link between modern decentralized finance (DeFi) and traditional financial systems (TradFi). It combines the open, efficient features of blockchain with the structure and reliability of traditional banking. By offering easy-to-use platforms, Credifi helps individuals and businesses access services like lending, borrowing, and investing in a straightforward way. It allows users to take advantage of new financial technologies while keeping the trusted elements of conventional finance. This approach opens doors to a wider audience, making financial tools more accessible and practical for everyday use, creating a balanced and connected financial world.
What is CREDI?
CREDI is the native token of the Credefi platform used for rewarding lenders. Apart from a reward redistribution token, CREDI has more use cases.
Use case of CREDI
- Reward distribution: CREDI acts as a reward distribution token. Lenders receive CREDI tokens based on their loaned funds, the higher the funds the higher the reward.
- Security layer: The CREDI token offers an additional layer of security to the Credifi platform. It prevents the platform from potential risks like hacks and scams.
- Investment: It allows token holders to access Credefi services and take part in investment programs conducted on the platform.
- Governance: CREDI token holders can participate governance and decision-making process of the Credefi ecosystem. By minting the profit-sharing tokens, users can be involved in profit-sharing.
- Utilize VIP features: A person holding a CREDI token gets free access to selected VIP projects and portfolios.
- Collateral-free loans: Considering their on-chain behavioral patterns, users holding the CREDI tokens are offered zero collateral loans.
- Fee: CREDI tokens are utilized as transaction fees in Credefi credit market platforms.
How to buy CREDI?
Buying a CREDI token is simple and involves only a few steps.
- Create an account on a reliable and secure crypto exchange platform.
- Verify the account by providing an identity document.
- Add a payment method such credit or debit card, or bank account.
- Using the payment method chosen buy any cryptocurrency or stable coin.
- Transfer the purchased coin to the trading account on the exchange platform.
- Choose the Credefi trading pair, CREDI on the spot market.
- Place the order to exchange the cryptocurrency for CREDI.
- Once the transaction is completed, the CREDI tokens get transferred to your account wallet.
- Store your CREDI token within the exchange wallet or transfer it to any noncustodial wallet.
Final Thoughts
Credefi is an innovative approach to combining decentralized apps with traditional finance. It eliminates all the issues of a decentralized sector and focuses on assisting small and medium enterprises. The ecosystem’s native token, CREDI offers large use cases including reward distribution and decision making.