A 🧵 about @parallelfi, one of @polkadot's fastest-growing #parachain. Parallel Finance is a decentralized money market protocol that offers lending, borrowing, and liquid staking for any asset in the Polkadot ecosystem.
Alternatively, read our article: bit.ly/3vRPyQf
"Parachains connect to Polkadot by leasing a slot on the Relay Chain for up to 96 weeks at a time, with the option to renew. Parachain slots are assigned by an on-chain auction, with auction winners locking up a bond in DOT for the duration of the lease."
- Polkadot's Website
Crowdloan participants can be subject to opportunity costs when participating in crowdloans - their staked tokens are locked for the duration of the parachain lease period. Parallel solves this by offering liquid versions of tokens staked to crowdloans and network validators.
How it works:
- Liquid staking
- Auction loans
- Decentralized credit scoring
- Interest rate swaps
Liquid staking -
Users who stake $DOT or $KSM tokens through Parallel get $sDOT and $sKSM as the tokenized staking derivatives. The token derivatives represent the $DOT and $KSM in the pool. Additionally, users can loan out or use $sDOT/$sKSM as collateral for borrowing
Auction loans -
Users can deposit collateral for floating or fixed interest, and those pursuing can borrow from that collateral to participate in parachain auctions. This means that users earn a fixed rate on their auction loans on top of the incentives offered by the projects
Decentralized credit scoring -
The credit scoring is in place to keep in check the rogue institutional borrowers and give all the lenders a second line of defense to negotiate the payment terms of loans.
Interest rate swaps -
A user with a fixed-rate loan can switch to a floating interest rate if they suspect that a bear market is on the way and want to take advantage of the lower interest rates.
Tokenomics -
$PARA is the utility token on Parallel Finance. Users can get $PARA on external exchanges or the Parallel Finance website by connecting PolkadotJS or Clover wallets.
Governance -
When @yubo_ruan founded Parallel Finance, he designed it to be a #decentralized protocol. The platform has four types of stakeholders; open contributors & development team members, investors with $PARA tokens, platform users, and network maintainers.
Roadmap -
- V2 Decentralized Crowdloan
- V1 Multichain Wallet
- V1 Regular AMM
- V2 AMM — Stableswap
- V2 Decentralized Liquid Staking
Parallel's competitive advantage is offering lending, staking, and borrowing under one umbrella. The parachain market is still in its early stages with an enormous untapped market, and we can only wait and see how Parallel Finance will change the DeFi space for the better.
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