As user adoption on the Ethereum network increases, transaction throughput decreases, while transaction fees increase. In order for a transaction to be confirmed, a transaction must undergo a number of confirmations. A confirmation is required to ensure the probability of duplicate spending is zero. For each confirmation, a transaction must wait a specified amount of time. Users can supply more “gas” to accelerate transactions during periods of heavy network congestion. Gas fees are transaction fees that are made by users. These are payments to miners to compensate them for the utilization of vast amounts of computational energy required to process and validate transactions on the Ethereum blockchain. This poses a huge challenge to both Ethereum and projects built on the Ethereum platform with regard to scalability.
As mentioned, Ethereum’s primary function is to be a platform for building smart contracts and DApps. However, high transaction fees and low transaction speeds defies the point of utilizing it and perpetuates the huge obstacle for widespread adoption and scalability.
Activity has surged on the BSC network. As such, there are various opportunities to effect change in the DeFi ecosystem, ranging from Token Swaps to decentralized automated marketing to the application of Non-fungible tokens (NFTs). The BEP-20, BEP-721 and BEP-1155 token standards are all supported on the Binance Smart Chain.
BSC was built from the ground up to be EVM (Ethereum Virtual Machine)-compatible, which means it began supporting the large ecosystem of Ethereum tools and DApps right from the start. With this, developers would be able to migrate their applications easily from Ethereum. It implies that third-party apps may be made to function on BSC with little effort. Binance Smart Chain blocks are on average 3 seconds apart. Also, the implementation of a Proof of Staked Authority (or PoSA) consensus model is used. This allows people who join the validator pool staking BNB to become validators.
Using a dual-chain architecture, the notion is that users may move assets across blockchains without having to worry about cross-chain compatibility. By this method, users may trade at a lightning-fast pace on Binance Chain, while Dapps like Gennix may be constructed on the BSC. Because of this universal connectivity, users are presented with a broad array of options to meet a variety of requirements and functions. BSC makes it possible for assets from other chains to be integrated into the expanding DeFi ecosystem. As Gennix runs on the quick processing capabilities of the BSC platform, it will enable users to enjoy quicker transaction processing times, lower transaction fees and increased scalability
Scaling strategies in Layer 2 transfer transactions off-chain and wrap them in evidence that is returned to the main chain. Layer 2 scaling solutions have improved transaction speed at low cost. These configured networks are EVM compatible and can be customized. This provides both versatility and functionality in a niche manner while continuously connecting the principal BSC network. The scalability issue and high transaction cost of Ethereum are resolved with BSC Layer 2 scaling solutions.
The Gennix Protocol was developed on BSC, which is interoperable and blockchain agnostic. Being blockchain agnostic is a massive advantage for Gennix as it does not constrain us to the use of a singular blockchain protocol, thus effectively “future-proofing” our DApp against unexpected developments in the blockchain space. Lastly, BSC being highly interoperable allows for smooth sharing of information and communication between different decentralized networks without the need for an intermediary. This will inevitably result in completely permissionless and decentralized systems.
Layer 2 scaling solutions are classified into state channels and sidechains. Any network participant on a state channel is presumed to act as a validator, which is a fixed list and anyone may use the network on a side chain that has a different validator set. Sidechains are often customized into non-custodial sidechains.
On a custodian side-chain, properties with their own consensus and stability are transferred through a parallel chain whereas non-custodial sidechain assets on the main chain are guaranteed by smart contracts. By incorporating side-chains into the Gennix platform, main chain nodes need not keep every transaction from the side-chain. For example, users might execute hundreds of side-chain transactions, enter the side-chain, and leave with only one mainnet transaction.
The key benefits of side-chains like BSC are faster transactions and lower gas fees than if transactions are done on the mainchain (Ethereum mainnet).
In DeFi loans, a borrower has to contribute something more valuable than the sum of the loan in order to receive a loan. So, in order to borrow capital, borrowers will need to collateralize their loans with supplied collateral in the range of 150%-200%. The collateral can be in a wide range of cryptocurrencies, as approved automatically by the smart contract. This is to protect the lender against loan defaults by the borrower. Nevertheless, DeFi loans are still risky.
The provision of such an exorbitant amount of collateral is a safeguard against steep declines in the value of collateral, bear markets and loan defaults.
As the use and popularity of DeFi platforms over traditional finance products became clear, the total amount of assets locked up in Ethereum protocols increased from just US$1.25 billion a year ago to well over $65 billion today. Transaction costs have skyrocketed on the Ethereum network in recent months as the world of DeFi is quickly getting more expensive and thereby risks undercutting the platform’s advantages.
Owing to escalating gas prices, Ethereum’s network has surpassed an average of $50 per transaction due to congestion. This has led to loans becoming highly undesirable on many open lending sites, as consumers now have to supply collateral and repay their loans with interest. The costs involved with small loan might total more than the interest owed, resulting in a unnecessarily costly transaction.
Gennix utilizes BEP-20 tokens as it is required for DApps on BSC. The use of BSC allows faster and cheaper transactions relative to the Ethereum Mainnet, and provides the additional benefits of trading NFTs. BSC has witnessed substantial growth and user engagement and is sure to grow in the future.
When compared to working on other platforms, working with BSC will provide a substantial advantage, particularly with regard to transaction fees that are about 90% cheaper than what is experienced on Ethereum. As operating expenses for BSC would be lower, this enables Gennix to move quicker in its pursuit of full decentralization by offering members of the community the option to become validators. Compared to the Ethereum network, node operators there were expected to have sizable cash bases in order to become a validator – thus proving to be a barrier to entry.
At Gennix, we have made our borrowing and lending platform effortless and transformative by utilizing the BSC network to drastically reduce gas fees. This encourages network participation within the Gennix ecosystem.
With our open lending protocols we enable customers to deposit collateral, and also provide an option to get a relatively low APR loan that must be repaid before they can reclaim their collateral. In this case, a lower collateral ratio will allow borrowers to borrow more and boosts the overall system’s usefulness. They are also useful as a source of income since people may deposit their assets and use them as collateral, which is then secured and loaned to others. Borrowers pay interest to those lenders, and lenders gain interest from the borrowers.
As the crypto lending market has a large supply of loans but only limited loan demand, our platform with lower collateral ratios will gain a competitive edge over other platforms.
Borrowers are also separated from the identity maps and their trail record, collateral-free or under-collateralized credit is a vague hope. A higher collateral ratio is often related to a multi-stakeholder partnership loss of confidence.
DeFi lacks a method to evaluate and scientifically evaluate a user’s creditworthiness. Higher leverage represents a flexibility cushion and reduces the probability of winding-up incidents. This however leads to inefficiency and lost business opportunities. The lack of credibility criteria is a major obstacle to the growth of innovative financial products and to institutions’ ability to make loans more decentralized. This exacerbates the problem of interest efficiencies and higher operating expenses.
Gennix’s use of TrustScore is the piece that completes the DeFi puzzle, and when employed properly will usher in mainstream adoption via increased security and confidence resulting from this trustless scoring system, inspired by a dominant entity in the crypto space: digisure.ai
Potentially fraudulent transactions will be examined and assessed further to locate their contamination source. These wallets and addresses will be blacklisted and are conspicuous so that users may easily spot them. Consumers will be made aware when interacting with other users who may be potentially fraudulent, thus safeguarding the interests of users on our platform.
Using TrustScore, TrustScore’s patented algorithms will assess a BEP20 address to define it’s creditworthiness. In order to test credit behaviour only by using this whitelisted BEP20 address, TrustScore scans consumer activity on different loan platforms and protocols. Users can include as many whitelisted addresses as they wish, but the algorithm will only collect relevant financial data from users who need to be assessed when performing a certain activity.
Our method aims to solve the issue of over-collateralization and adds a layer of identification in a decentralized financial ecosystem. In the coming future, a different paper will also be published outlining the detailed process.
This protocol further supports under-collateralized loans which lower the barrier for borrowers and in turn boosts returns for lenders.
Traditional capital markets deliver a broad variety of options and goods. However, organizations are easier to reach than retail customers. Users must then subscribe to and utilize what organizations deliver. DeFi has turned the tables with regard to mutual funds, fixed deposits, term deposits, insurance, shares and stocks
DeFi not only empowers creators to produce and distribute these sophisticated financial tools but also gives consumers a voice to request apps that they feel will add value to the community. We currently realize, that the decentralized financial market today lacks such tools. We conclude that innovative financial products can be developed and rendered more available by decentralized financing of more real-life applications.
Furthermore, the rate at which the decentralized economy grows is inevitable not to be taken into account. The main explanation for this is the flow of money to the sector from institutions and from HNW/UHNW (High Networth Individuals and Ultra-High Networth Individuals). In order to maintain such a market size, we assume DeFi lacks the same and thus needs a more sophisticated financial commodity.
As discussed above, we plan to offer sophisticated financial products to our users. We decided to introduce goods into our microlending segment as our first bid. Micro-financing provides investors with a far lower cost in terms of interest than conventional banking and Peer-to-Peer (P2P) markets, with time-binding credit. These loans may be taken directly into the wallets and used for different purposes. For small businesses, microlending offers a big use case of capital fulfilment for their daily operational needs.
The lending markets mostly appeal to the borrower’s need for funds for trading purposes throughout the decentralized financing. A massive inflow of institutional capital through different protocols and networks was observed recently. We assume that institutions have ultimately kept trusting the code to deploy their funds in pools that generate more capital. As the first of such financial derivatives contracts, Gennix has ambitions to offer protection by means of credit default swaps. More comprehensive details on design, architecture, implementation etc. is publicly available in the following documents.
Of course, the task of sub collateralization is of great significance, as well as credit delegation processes for developing certain financial goods. In subsequent articles, we will publish extensive details on various items and relevant principles.
Binary Options will also be included where users may choose between a call and put options that are valid for a short period of time. Users will select the direction in which they believe the price of their token will change, either up or down, thus the term binary. By removing technical jargon, it enhances the accessibility of the product and assists users in gaining a better understanding of protocol and its operations.
Yield farms have seen significant interest in the last few months. As the number of individuals searching for investment opportunities continues to rise, yield farms have emerged as a popular choice for cryptocurrency investors because of their simple premise, easy user interface, and typically annual percentage yield (APY).
However, like cryptocurrency trading, yield farms have mainly turned into a playground for whales because withdrawing dividends would often result in a loss of money due to high transaction fees.
NFTs are tokenized versions of real or digital assets and each token is unique, authentic and digitally scarce. NFTs can only be sold, exchanged or transferred in their whole form. Because of these unique properties, NFTs have helped bridge assets across different industries.
NFTs, mixed with this explosive, emerging financial vertical have limitless potential. They can be used as collateral in DeFi lending and can also represent more complex financial products like insurances, bonds or options.
While NFTs have been known to be widely used as a collectible, we have incorporated it into our structure to make them functional by adding utility and value to our investors.
