Goldfinch vs DeFi lending.

Decentralized lending platforms (DeFI) have been around for years, the trend for DeFI appeared back in 2019, which is quite a long time by cryptocurrency market standards. In fact, DeFI is a kind of big exchange that is not supported and controlled by centralized exchanges, but by smartcontractors and users. In fact, DeFI in its current form, in my opinion, is a step towards that very decentralization, but still, let’s be honest, all operating DeFI platforms are created by crypto-enthusiasts for crypto-enthusiasts and mass adaptation is still far away. Although, in the long term, this model has a great way to reach mass markets, for example, due to perfectly implemented function to obtain loans.
Ordinary middle-income people who need money can’t get cash as collateral because they don’t have the right amount in their account as collateral. Goldfinch service solves this and other problems of decentralized lending.
One of the features of today’s cryptocurrency lending services is the need to post collateral that exceeds the loan amount.For example, if someone wants to get a loan of $100, they will have to prove that they own at least $120 in assets. This seems counter-intuitive, since the services of lending institutions are used by people and companies when they have money problems in the here and now. Most potential customers of banks and DeFi lending institutions simply do not have the amount they need, and for this reason they will not get a loan.
Goldfinch is the first credit service in decentralized finance that makes credit available to people in countries where banks offer high interest rates and unfavorable terms.
These are developing countries, whose residents develop their own business already actively use the service and can get money for its development without providing collateral. They also have a source of passive income, because anyone can become a creditor on the Goldfinch platform.
This can be called a real breakthrough. After all, many creators of cryptocurrency platforms, including those that allow borrowing or lending money, position their projects as publicly available. However, in reality, this is not the case.
The average resident of an African country with a developing economy is unlikely to take advantage of an offer in which before borrowing money, he must first pledge the same amount of money.
The Goldfinch protocol works on a different principle.
The reliability and security of the credit service is ensured by the participants of the lending process. In addition to borrowers and lenders, these are auditors and liquidity providers. The former check the borrowers for compliance with the established criteria. The latter deposit personal financial assets into an account to earn a percentage of their use by the system. Money is deposited into the borrower’s account in two tranches: Junior and Senior. This is convenient and safe for all participants in the process.
Another difference is the possibility of building a long credit chain. Goldfinch can provide loans to small lending institutions, and they, in turn, will offer the best terms to small borrowers, among them first-time entrepreneurs and even individuals.Small investors will also be able to benefit by investing in Goldfinch and getting 10–14% of the invested amount per year.
Thanks to Goldfinch, the number of people using blockchain technology in one way or another could increase dramatically at the expense of users who simply didn’t benefit from it before. The new credit platform brings closer the day when blockchain will become an integral part of humanity’s life.