Runs On Radix Q&A: Weft Finance | The Radix Blog | Radix DLT

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TLDR

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What is Weft Finance?

Weft Finance is a decentralized lending and borrowing platform built on the Radix network. Unlike traditional platforms, Weft Finance is not just another lending service; it’s a comprehensive tool designed to meet the unique needs of its users.

Core Features

At its core, Weft Finance provides a dApp that offers users a two-pronged financial solution: a space to deposit assets and earn competitive interest alongside the ability to use these assets as collateral for borrowing. This combination of features is built seamlessly into the dApp, establishing it as the cornerstone of Weft Finance. Users are granted access to a spectrum of financial opportunities, each underpinned by robust security measures and total transparency of the Radix network.

Target Users

Weft Finance aims to cater to two primary user groups within the Radix community:

XRD Holders: These individuals already possess XRD and are looking to maximize the potential of their holdings. They’re exploring ways to benefit from additional opportunities within the Radix ecosystem or considering ways to liquidate their assets without selling them outright.

Liquidity Providers: This group consists of those who wish to capitalize on the Radix ecosystem by providing liquidity to newly launched dApps, thereby earning yield on their capital.

While the initial focus is on these Radix-affiliated groups, Weft Finance has its sights set on a broader audience, including those unfamiliar with Radix or even decentralized ledger technology searching for frictionless financial services.

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Real-World Examples

Scenario 1: Leveraging XRD with Weft Finance

Onboarding: Users connect their Radix wallet to Weft Finance and navigate the user-friendly interface.

Asset Deposit: Users wanting to earn interest on XRD tokens or use them as collateral for borrowing can do so by depositing them via the dApp.

Minting Wefties: Users can mint a Wefty that represents their collateral after depositing. This Wefty is an NFT representing the collateral and can be transferred or used for other financial activities.

Exploring Opportunities: If a user finds a new project in the Radix ecosystem that they want to engage with. Instead of selling his XRD tokens, he uses them as collateral to borrow stablecoins through Weft Finance.

Token Buy: Users can engage with the new project through the new borrowed stablecoins, hoping for a return.

Interest Earnings and Repayment: If the new project performs well and the user earns a good return, they can repay the stablecoin loan on Weft Finance and might even make some interest on the original XRD deposit.

Scenario 2: Delegated Borrowing for a Friend

Delegated Borrowing: If a user acts as a delegator, he can create a ‘Delegatee Wefty’ linked to a ‘Delegator Wefty’  in a Delegator-Delegatee relationship. The user can then lock some collateral in the Delegator Wefty and send the Delegatee Wefty as a delegation of Borrowing Power.

Setting Parameters: A debt ceiling can be set, specifying how much can be borrowed against the collateral.

Borrowing and Token Buy: Using the delegated borrowing feature, stablecoins can be borrowed to buy tokens from another promising project built on Radix. 

Successful Outcome: If the newly acquired tokens perform well, the users can repay the borrowed amount. The collateral can be released, and both users can benefit from the financial opportunities Weft Finance provides.

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Unique Features

What sets Weft Finance apart from the competition? 

Wefties: These are NFTs that represent a user’s collateral and loans. Not only are these Wefties mintable in any number, but they are also transferable, effectively decoupling the user’s account from the dApp.

This unique feature opens up a world of financial possibilities, from establishing delegation-delegate relationships to earning yields based on deposit APY and loan interest rates.

Decoupling the user’s account from the dApp means that the user’s financial positions (loans and collateral) are not tied to a specific account on the Weft Finance platform. Instead, these positions are represented by Wefties, which can be transferred or traded independently of the user’s account. 

Using Wefties to represent the position offers greater flexibility and freedom, as users can manage their financial positions as separate assets, even transferring them to other users if desired. This is a significant departure from traditional DeFi platforms, where a user’s economic activities are strictly tied to their account.

Delegator-Delegatee Relations: The feature of delegated borrowing takes a unique form through ‘Delegator-Delegatee Relations.’ A user acting as a ‘delegator’ can link their Wefties (NFTs representing loans and collateral) to another user, the ‘delegatee.’ 

This allows the delegatee to borrow funds without providing their collateral. The delegator can limit how much the delegatee can borrow, either as a fixed amount or as a ratio of the available collateral. This innovation adds a layer of flexibility and accessibility to lending and borrowing within the DeFi ecosystem.

Flexible Collateral Ratios: The ability to adjust the amount of collateral needed to secure a loan. Unlike traditional systems with fixed collateral requirements, flexible collateral ratios allow for dynamic adjustments. This means that the borrowing power of a user is not solely dependent on the assets they have supplied as collateral but can also be influenced by other factors, such as assets intended to be borrowed.

In simple terms, flexible collateral ratios give more flexibility on risk adjustment of the platform and will help with fewer constraints for future asset listing.

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Solving Real-World Problems

Weft Finance addresses several challenges in the DeFi space. One of the most compelling is its unique approach to collateral and loans through Wefties. These NFTs serve as functional financial instruments from the get-go, enabling a range of applications, according to the Weft Finance team: “The implications are far-reaching. For example, a parent can allocate resources to their child through a delegated Wefty, while companies can employ Wefties with collateralized assets to facilitate loans for new employees. Financial institutions can also leverage Wefties to symbolize lent assets, enabling the direct sale of these assets as financial instruments, bypassing the cumbersome costs and delays of traditional finance.”

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The Inception of Weft Finance

The Founders: A Blend of Expertise and Passion

The driving force behind Weft Finance is its dynamic duo of founders, Atoumbré and Yetinin, each bringing a unique set of skills and experiences to the table.

A telecommunication engineer and statistician, Atoumbré has a diverse background in software development, media, and telecommunication networks. He manages support services contracts in West Africa for a U.S.-based telecommunication equipment vendor. 

His academic credentials include two Master’s degrees—one in Electronic Engineering and another in Applied Statistics and Economics. Notably, he also won the best Lending dApp prize in the Scrypto Challenge #7.

Yetinin is a lead developer at BilletReduc, a French online ticket sales company. His prior experience includes roles as a senior developer at fnac.com and consultant for the United Nations’ International Trade Center. He co-founded a startup, ‘Mtick,’ which sold intercity transport tickets online in West Africa. Yetinin holds a Master’s in Embedded Electronics and Industrial Computing from Paris Sud University.

A Meeting of Minds

The founders first crossed paths when Yetinin reached out to Atoumbré after discovering they were both winners of crypto challenge prizes and hailed from Ivory Coast. Upon meeting in Abidjan, they quickly realized they shared a common vision: to contribute actively to the Radix DLT project as builders. This meeting led to the formation of a diverse six-member team, half of whom were newcomers to the world of cryptocurrency but were nonetheless captivated by the innovative approach of RDX Works within the Radix ecosystem.

The Genesis of Weft Finance

As active participants in the Radix community, the founders noticed a gap in the market—there were few projects focusing on lending services with the option to delegate borrowing authority. Recognizing this opportunity, they set out to create a dApp that would fill this void.

Why Radix?

Before their collaboration, both founders explored ways to contribute to the world of Web3. However, they found that the Ethereum Virtual Machine fell short in scalability, security, and user experience. Their search for an alternative led them to Radix, which impressed them with its groundbreaking approach and comprehensive suite of tools, including Scrypto, the Radix wallet, and its linear scalability solution.

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For more information on the project, head to the website, follow the project’s official Twitter account or join the Telegram channel.

‍All information about Weft Finance was provided by the Weft Finance team and has not been verified by Radix Publishing, RDX Works, or their associated companies.