Yield farming protocol Wing Finance reached almost $200 million in collateralized assets today, with most liquidity pools retaining a stable APY rate above 10%.
The Flash Pool contains 11 unique assets, which successfully provide one of the highest LP rewards in the entire DeFi ecosystem.
Wing Finance is a DeFi platform launched in September this year that offers cross-chain interaction between a variety of tokens.
The platform’s goal is to provide a fully decentralized governance model that hosts a balanced economy for borrowers, guarantors, and creditors.
By doing so, Wing Finance offers a better implementation of higher-quality DeFi products all in one place. At the time of writing, Wing Finance offers 11 liquidity pools including UNI, NEO, SUSD, USDT, DAI, ETH, WING, USDC, renBTC, ONT, and WBTC.
So far, users have supplied $203 million to the Flash Pool, the part of the protocol where users provide liquidity. Moreover, statistics show that users borrowed $92 million in total, with $9.4 million in insured assets. Users can utilize the insurance pool as a form of risk management, in case they lose their assets.
To solve the problem of a lack of Credit-based DeFi protocols, the team decided to develop a DAO-based credit platform. Thus, developers ensure a fully decentralized environment with the help of Wing DAO. The team believes that credits bring various fundamental enhancements to the sector of decentralized finance.
First, credit delivers credit-based lending which enables users to leverage borrowed assets. Additionally, the system expands available collateral categories for cryptocurrency. Last but not least, credit system provides the necessary tools for regulatory compliance if needed.
How does Wing Finance Work?
Wing Finance is based on three fundamental features, credit lending, asset digitization, and regulatory compliance. Through credit lending, Wing integrates credit assessment into modern lending products through even reduction of collateralization requirements.
As for asset digitization, credit-based DeFi platforms such as Wing Finance help by confirming on-chain lending data. For example, assets require blockchain confirmation for credit information within DeFi. This kind of data includes legitimacy, attributes, asset ownership, and more.
The most important aspect of this type of DeFi platform is regulatory compliance. As decentralized finance continues to expand and reach new highs, it will eventually require to reach the necessary compliance levels.
To avoid falling under the scope of securities, governance tokens have to meet certain criteria as well. But most importantly, DeFi financial platforms must achieve regulatory compliance if they wish for massive adoption.
Achieving decentralization for Credit-based DeFi systems
To protect users from credit risk, Wing Finance created a special risk control mechanism. First, any Credit-based platform that is fully decentralized needs to implement the necessary verification elements for credit data.
For it to not be centralized, developers have to avoid implementing legacy mechanisms such as manual reviews or centralized storage. This is especially important for credit-based DeFi projects considering that risk control and credit elements require two key elements. These key elements, which must also remain decentralized, includes data sovereignty and automated auditing.
Naturally, self-sovereignty over data means that the user who utilizes the credit platform holds full control over his identity and data. To make this possible in a decentralized way, users have to manage their accounts on their own. Additionally, they have to authorize every action they wish to take.
On the other hand, automated auditing basically means that developers combine credit elements and smart contracts. To automatically review information in a decentralized way, there must be no intermediary.
Smart contracts qualify for this system as developers can program them to automatically execute preexisting contracts. Oracles also achieve the required level of decentralization as they can reliably bridge the gap between on-chain and off-chain networks.