The value of uncollateralized credit markets is in the trillions of dollars. Real-world borrowers can now make use of the abundant money available in the decentralized finance (DeFi) market.
DeCeFi is enabled through a recently established initiative called BNPL Pay, which connects DeFi with centralized financing (CeFi).
The BNPL Pay Protocol is a network of decentralized banking nodes designed to serve this massive, largely underserved market.
With investors such as 0xVentures, Qi Capital, Clee Capital, different ThorChain VCs, and TheCryptoDog on board, it’s no surprise that this innovative initiative has recently caught the attention of the public.
When it comes to blockchain lending, uncollateralized loans have always been a problem. With a network of decentralized banking nodes encouraged to perform and compete for total value locked, BNPL Pay’s novel protocol design tackles these challenges (TVL).
Users of the BNPL Pay protocol will be able to do the following after the platform launches in November:
- Lenders can take advantage of the long-term yields available in the traditional financial arena by lending digital assets to any of the protocol’s nodes.
- Borrow: Borrowers can apply for a loan straight using the BNPL Pay app from any of these banking nodes.
- Stake: In exchange for a piece of the interest, holders will be able to stake BNPL tokens in a node as insurance.
- Operating a Banking Node: Anyone can launch a banking node by bonding a minimum of BNPL tokens.
The crypto lending market has expanded in recent years. Aave and Compound, two DeFi cryptocurrency platforms, have paved the road and evolved into multibillion-dollar protocols. The biggest opportunity, according to BNPL, is servicing the unsecured loan market. Other DeFi protocols have so far overlooked the biggest opportunity in traditional credit markets, which is unsecured loans.
The BNPL token, which is currently traded on SushiSwap and MEXC Global, is the protocol’s governance token. It will have a variety of utility features, including bonding to establish a banking node and staking banking nodes as a type of loan default insurance.
Sushi LP Staking was added to the BNPL Pay App last month. At the end of November 2021, the MVP banking node will go active.