Introduction

EasyFi is a universal layer 2 lending protocol built for DeFi focused on scalability, composability, and adoption. It has been designed as an open network infrastructure to run on public networks to facilitate an end-to-end lending & borrowing of digital assets and related financial products.

Freedom to create new financial products and customize existing ones paves the way for permissionless innovation. ‘Proof of Reputation’ contracts establish creditworthiness and promote greater efficiency and transparency for better lending & borrowing opportunities. Non-custodial contracts allow seamless on-chain & off-chain transactions of digital assets across markets and participants while retaining custody with the original owner.

The network design is ethereum compatible and blockchain agnostic allowing instant settlement of assets over different blockchain networks while retaining custody with the asset owner’s network. The cross-chain framework allows lending & borrowing across a spectrum of global markets including private platforms and permissionless public networks. The network is secured by proof of stake mechanism, governed through participating voters to achieve consensus among network participants.

EasyFi believes this technology can be transformational for the lending ecosystem while retaining higher efficiency, lower transaction costs, lower dependency & greater transparency.

Undercolletralization & Borrower’s evaluation

Enforcing something financially which isn’t financially backed is a great challenge. To mitigate the risks involved one of the approaches could be to shift the burden to a better-suited entity. A third party that can't guarantee repayment in case of default. It can be termed as a process of social fund recovery where the borrower’s guarantee is taken by a certain individual who is ready to back the event. Since anonymity and privacy have been core or decentralized finance it would be counterproductive and tough to find such backing. Therefore, the guarantor approach won’t be best suited.

Another approach that can be taken from traditional financial markets is replicating credit score mechanisms. Legacy finance has been utilizing credit evaluation techniques through consortiums which created and maintains a centralized database for assessing borrower’s credibility. Historical data of users is collected, collated, stored, and analyzed on the basis of preset parameters to suit the satisfaction of lending entities. These lending entities feed tons of data to the centralized engine which, over time, becomes invaluable for credit risk management. Of course, there are shortfalls to this approach as we have witnessed leakages, misuse, and exploitation of user’s data by key centralized institutions and sovereign entities. But using the right mechanisms, since we enjoy the liberty of distributed databases and peer to peer interaction in a decentralized world, we believe, EasyFI can create such a system so as to assess borrower’s creditworthiness while addressing the shortcomings.

Therefore, EasyFi wanted to use a system that doesn’t allow for censorship beyond lending and where users are in complete choice and full control of their data while preserving the privacy & degree of anonymity too. Tough task! Huh. EasyFi explored much but got to understand that the identity layer problem is not easier to solve. Finally, EasyFi ended up creating theri own identity layer protocol called TrustScore that helps solve the dilemma. Using TrustScore users can whitelist an ERC20 address and Trustscore’s proprietary algorithms create metrics that help establish borrowers (read user’s) creditworthiness over a period of time. Trustscore scans user’s activity on various lending platforms and protocols to assess credit behavior only through that whitelisted ERC20 address. Users have a choice to add as many whitelisted addresses as they want. The algorithm intends to gather only related financial information of users required to establish a certain behavior and non-financial reputation would be uncensorable even in case the user is at default.

Using the system, as explained above, Easyfi intends to solve the problem of over-collateralization and identity layer (up to some extent) in the decentralized finance ecosystem. A separate paper detailing the mechanism shall be released in the near future too.

Borrowing Assets

‘eToken’ holders by using the same as collateral can borrow from EasyFi money market protocol and other integrated protocols in the ecosystem, seamlessly. Users can specify the asset to be borrowed without getting into the hassle of negotiating terms and conditions but with desired parameters, so set by market forces. Transparency and uniformity make the money market unique in its approach for all network participants.

Collateral Value

Each market has a collateral factor 0 to 1, representing a portion of the underlying asset that can be borrowed. Lower collateral factors interpret illiquid market and higher collateral factors represent high liquidity in the respective market. The user’s borrowing capacity is calculated by multiplying collateral factors by the sum value of accounts with underlying assets.

Liquidity Pools

Under existing standard mechanisms borrowers are matched with lenders. These borrowers pay an interest fee for seeking assets and lenders are rewarded for providing liquidity to the market. The cost incurred to borrowers is incentivized to lenders therefore acting as economic incentives to maintain liquidity in the market. Therefore, they act as operators of the money market which provides sufficient depth to the liquidity pools.

Micro Lending

Peer to peer financing has witnessed huge growth in digital assets markets and we have seen impressive advancements in the sector leveraging p2p applications. One of the major use cases of peer to peer financing is microlending. But Defi has still to offer microlending as a service to its users. Microlending enables the deployment of funds to real-world use cases and derives better value economies. Creditworthiness helps establish trust in multi-party agreements and allows uncollateralized lending through a shared pool and credit delegation to a seeker of choice.

EasyFi intends to facilitate lenders offering undercollateralized loans of smaller value to borrowers. Inherent risks of credit default and non-payment are shared by existing lenders in a proportionate manner. Lenders here provide liquidity to pools meant for portfolios of many dozens of microloans. By spreading the risk across a large number of lenders it is ensured that the whole portfolio is not wiped out and loss is shared. This facilitates the expansion of lending markets to new dimensions that DeFi has yet to witness.

Dual Yield Farming

Governance delegation combined with novel incentivization structure has enabled a great deal of decentralization. The network effect with vested interest helps create large value networks. Yield farming makes a network robust and unleashes great economic innovation. Yield farming includes a digital asset holder putting his digital assets to work by investing it in the network itself. In return, they are paid a fixed or variable interest on their invested crypto assets.

For accelerating the adoption of this newly launched lending protocol and attracting new liquidity onto a layer two blockchain network, we would like to introduce a new variant of yield farming or liquidity mining called “Dual Yield Farming” whereby EasyFi along with different partner projects, will allocate a portion of EASYFI tokens (EASY) and partner project’s native token (say XYZ) towards incentivizing liquidity providers and yield farmers. This in turn, we believe, will bring in community interest and supply to the protocol hence enabling desired liquidity as well as engagement.

Under dual yield farming, a higher APY ( Annual percentage yield) can be achieved in a sustainable manner. Since the inflation of native token is controlled and is complemented through corresponding emission of incentives of another partner token, users tend to earn more, in a sustainable way, over the period of time. By innovating yield farming structure and combining forces with other quality projects, easyfi has adopted an open-minded approach for a more collaborative & engaged community with an end goal of incentivizing users for the long term and earning their loyalty. More details on dual farming and subsequent collaborations shall be made public from time to time.

Token Utility

EasyFi native token ‘EASY’ will be used for the following key functions...

Governance:

$EASY token will enable users to be able to play part in the protocol’s governance as EasyFi is going to become a DAO and enable the community to control various governance decisions w.r.t. Running the protocol.

Protocol Incentivization:

will enable users to earn rewards from time to time and provide them with voting rights in the upkeep of the protocol and continuous development.

Staking rewards:

$EASY token will enable various projects to launch their lending and borrowing markets on the EasyFi network hence will enable them to reward the users to stake $EASY tokens for earning rewards in form of tokens of the respective markets and interact with corresponding markets on the protocol.

EasyFi is the first protocol in the DeFi space to enable dual token farming, hence enabling various markets being launched on EASYFI to be able to incentivize EASYFi users to interact with those respective markets. Cross

Chain Settlement:

$EASY tokens will be used as a cross-chain settlement instrument in the various bridges created to communicate and share the liquidity with various other sidechain and main chains being built over a period of time like Binance Smart Chain, Polkadot, etc.