Kulfi Finance – Cardano’s first decentralized lending protocol

Under the name of Kulfi Finance, the first decentralized lending protocol is launched on Cardano, which promises its users fixed rates. In this way, customers should be able to make reliable passive income.

Cardano’s Kulfi Finance is now live

Dubbed Kulfi Finance, Cardano’s first decentralized lending protocol with fixed interest rates is now live. However, the full range of functions is not yet available.

First, it presells its own KLS token , which serves as its governance token. The sale takes place at a fixed price. For each ADA, the investor receives exactly 200 KLS. Each KLS represents one vote in the platform’s voting system.

What brings Kulfi Finance?

The Terra ecosystem gained tremendous notoriety for its Anchor lending protocol. On Anchor, however, users received – as is usually the case – variable interest rates for their investments.

Users can deposit funds on lending logs. These then serve as loans to borrowers who, over time, must arrange repayment with additional interest.

At least that’s the theory. What the makers of these services like to keep secret: the lenders usually pay out in the form of their own token. These are simply created out of thin air by the developers and then serve as payment for investors.

Accordingly, the protocols work even without enormous demand for credit. The costs are ultimately borne by the buyers of the token themselves. It is obvious that Kulfi also uses this principle – at least the technical basis speaks for it.

Just how popular these services still are was shown only recently with the resurgence of the Terra ecosystem. Now Kulfi also wants to arouse the interest of investors and is building on Cardano.

The special feature is a previously known fixed interest rate. How high these could be exactly, however, cannot be said in advance. Investors and recipients must find an individual consensus on this.

What are the advantages of a fixed interest rate?

Kulfi’s argument is as obvious as it is obvious: a fixed interest rate inspires more confidence among investors. You know in advance what profits you can expect. In order for the principle to work, you set a due date in advance.

Kulfi’s Fixed Loan product is based on the concept of the zero coupon bond, where the full face value is paid on the maturity date, with the face value being how much money the lender will receive on the fixed maturity date.

It says in a statement. Manolis Kyriacou, Kulfi’s advisor, is convinced that fixed interest rates are needed in order for the broad masses of borrowers to be considered at all. They need to know in advance what costs they will incur in the long term.

Lenders and borrowers must of course agree on the fixed interest rate beforehand. Users can invest in both the volatile cryptocurrency Cardano (ADA) and the stablecoin Djed on Kulfi.

Djed follows the working principle of the infamous algorithmic stablecoin TerraUSD.

Kulfi Finance Token (KLS) – what can it do?

The KLS, which has only just gone on sale in advance, cannot yet be found on the relevant data platforms. Why is its acquisition potentially interesting?

As a governance token, changes to Kulfi’s underlying smart contract can be decided by voting on its holders. It is also required in order to gain access to funds as a borrower.

Loans can be paid out with KLS, holders receive part of the fees paid on the platform and transaction fees on Kulfi can be paid with KLS.

The demand for these purposes can increase in the long term and at the same time the interest in the KLS. Then its market value would increase.