While DeFi has opened up infinite possibilities for lending companies, the transactions are only limited to collateral-based lending and financial arbitrage for the majority part of the existing DeFi Industry. This may look like an ideal scenario, but there exists a definite void between the DeFi crypto world and fiat world lending use cases. The TVL of DeFi stands at $75 billion, and a global, stable coin infrastructure like Federal Money can scale it up to the fiat $43 trillion in consumer lending.
This opportunity fuelled the vision of Federal Money of unlocking the full potential of DeFi lending by bridging the gap between the crypto world and the fiat operated world. Creating a global, multi-lever, algorithmic stable coin infrastructure, backed by a People-Powered Central Bank is the core of Federal’s unique value proposition. Federal’s vision is the outcome of a coterie of a predominately research-driven team - Conceived by ten PhDs and cryptographic researchers from top tier global business schools after two years of intensive research and analysis.
A bouquet of firsts from Federal
The go-to-market use case for Federal will be to target the point-of-sale lending, a $6 trillion lending market already and over 25% CAGR year on year. Federal Money’s key innovations will be game changers in DeFi lending.
Algorithmic Stable Coin that will liberate the stable coin ecosystem from over-dependence on USD and the collateral-based model. Federal’s move of a Multi-Lever Stability Mechanism (MLSM) will bring in the much-needed stability and protect stable coins from any currency risk.
Interoperable Multi-Chain Multi-Currency Bridge (IMMBs) is another feature that Federal Money brings to DeFi lending. Federal’s interoperable multi-currency stable network will open up seamless transactions among crypto networks and fiat currencies worldwide. This means, users can freely pay and lend across networks, and across DApps.
Machine Proof of Credit (MPOC) is another transformation Federal Money will bring about by creating a truly borrower-centric model. This will free users from declaring some kind of asset as collateral which limits borrowing capabilities. Federal’s non-collateralised lending will be powered by credit miners, lenders and borrowers across all markets through a machine generated Universal Credit Score (UCS) credits, which will serve as universal collateral across all platforms -a game changer in the Defi lending ecosystem.
On-Demand Privacy and Anonymity In the decentralized world of digital currency, the simple fact remains that no buyer or seller will want to disclose transaction details on a public ledger. Although the identity of those involved in the transactions is protected by a number of cryptographic functions, there are ways in which the source of the transactions can be linked to an identity and track transactions through the blockchain flow.
Federal Money bridges the existing concerns of Privacy & Anonymity in DeFi with a second layer of Federal Anonymity and Privacy Protocol (FAP) that rides on layer 1. This will serve as an augmented protection and users have the option of deciding whether they wish to make a transaction log public without compromising on the integrity of the vision of decentralization itself.
Bringing together the fiat world and the decentralized finance industry can unlock several new use cases that would otherwise remain inaccessible. Federal’s move will address the volatility and incentive issues by creating a different breed of stable currencies.
Federal has raised a $ 1 million grants through a syndicate of whales in top line crypto companies to realise its vision of transforming DeFi lending. With a robust strategy in place, the beta product release is scheduled for Q2 2021.
About Federal Money
Federal Money is an open finance lending platform at point of sale powered by a global, algorithmic decentralized bank. Federal is well-aligned to meet the opportunities offered by the new DeFi open lending infrastructure through its suite of offerings designed to bridge the gaps in the crypto lending world and the fiat world. For more information on Federal Money, you can check their website and whitepaper.