Fixed Rate Protocol

Borrowing

Borrowers on Kulfi Finance can receive fixed-term interest rates on their loans. Firstly, borrowers must deposit funds as collateral. Then mints negative wtokens. -VE wTokens can be redeemed or converted for an asset (Stablecoins). The -ve wtoken are representative of the funds borrowed in addition to a chosen maturity date when the repayment is due. Now, borrowers have a loan in the desired currency alongside an obligation for repayment with interest at a future date. Borrowers can choose to repay their loan upon reaching the maturity date or roll on their contract to a future maturity date.

Lending

Users who wish to earn interest on their capital can become lenders at Kulfi finance and earn a fixed rate. lenders has to deposit his asset to purchase positive wtokens assets that yield a higher valuation than their initial deposit at a future date. The +wtokens “matures” over time and becomes redeemable for currency upon reaching full maturity. The exchange rate or difference in value between the deposited amount and the +ve tokens asset upon maturity represents the interest earned.

Liquidity Pools

The liquidity pools provide the source of liquidity for lenders and borrowers of the Kulfi crypto platform to transact with. Instead of expensive traditional third-party intermediaries and banks offering shaded borrowing and lending facilities, Kulfi Finance offers secure, cryptographic public blockchain management of funds. Further, the liquidity is fully decentralized. Each liquidity pool holds cryptocurrency on one side and wtokens on the other. Moreover, each liquidity pool is representative of a maturity date.

Collateralization

Kulfi Finance uses a collateralization mechanism to ensure that lenders receive their investment back with interest on time. Moreover, the project only offers over-collateralized loans to borrowers. Kulfi accepts multiple types of crypto collateral, with collateralization levels differing depending upon the asset.

Liquidation

Liquidations occur when smart contracts sell assets to cover debt positions. In turn, this means that borrowers cannot simply take out a loan and never repay it. Further, instead of liquidating the entire collateral like a bank would repossess a house, Kulfi Finance only partially liquidates collateral. This means borrowers won’t lose all their collateral, only enough to maintain the collateralization level for the loan. In the unlikely event of extreme market turbulence and borrower liquidations not occurring quickly enough, Kulfi has its own reserve pool of native KLS tokens. The project will sell its assets to raise the capital needed to ensure lenders always receive their funds with interest.