DeFi is one of the crypto world’s fastest-growing sectors and set to shape the future of finance. It’s already started to break the stranglehold of banks and make people rethink the archaic processes established by traditional lenders.
While existing platforms have experienced rapid growth — with over $37 billion currently locked up in DeFi projects — Opulous will introduce a new peer-to-peer service, with a game-changing approach to collateral which harnesses the true value of real-world music assets.
DeFi is The Future of Finance
DeFi allows any borrower to quickly access loans without the need for credit checks and audits commonly used by conventional banking institutions.
Essentially, DeFi uses blockchain technology and cryptocurrency to provide financial services like loans, all facilitated via smart contracts.
It is decentralized and anonymous, cutting out unnecessary middlemen and extortionate fees. Users can also generate above-average interest rates by staking their crypto funds in lending pools.
While the benefits of DeFi are clear, current platforms still have challenges to overcome and users must accept a number of unpredictable risks.
Challenges Facing DeFi
As with any lending process, borrowers need to provide collateral of at least equal value to the DeFi loan they want to take out. On current platforms, cryptocurrency is used as collateral. This is where DeFi faces its biggest challenge.
The price of cryptocurrency is notoriously unpredictable. If the value of the crypto in question drops, so does the value of the loan’s collateral. The price of Bitcoin and other alt-coins have been on a wild ride in recent years, which can cause real problems for both DeFi lenders and borrowers using it to back up loans.
In order to mitigate this risk, one of the most prominent DeFi platforms MakerDAO asks borrowers to provide crypto collateral at a much higher value than that of the loan they’re requesting. A minimum of 150% in fact.
And if prices drop, the borrower often ends up paying the price.
In cases where the value of a DeFi loan’s crypto collateral does start to tail-spin, the lending pool is usually regulated to make sure investors don’t lose the money they’ve staked. This can be done by liquidating the collateral to cover the loan. The borrower will be able to keep their loan, but will likely lose out on the crypto they provided to cover it.
As you can see, the fluctuating price of cryptocurrency can bring about complications. But this is where Opulous differs from other DeFi platforms.
The Opulous Solution
Opulous is a decentralised peer-to-peer DeFi loan platform, providing artists with a more direct and accessible way to secure funding, while also offering everyone the opportunity to invest in one of the world’s fastest growing and most lucrative industries: music.
But it’s the Opulous approach to collateral that truly sets it apart.
Opulous loans are backed by future music royalty earnings and copyrights. Unlike cryptocurrency, these assets have predictable future value and carry no risk.
The platform will analyse a borrower’s music data and copyright assets to ascertain how much money they are eligible to borrow. It will then establish a custom loan repayment plan based on their predicted future earnings.
Musicians currently earning a steady royalty income will be eligible to receive up-front loans equal to the value of revenue they generate over 12 months, paying as little as 4% in interest rates.
Most of the DeFi services out there right now run on Ethereum. Opulous however, is built on the Algorand blockchain.
Algorand is one of the most advanced and exciting blockchain projects in the world, renowned for its security, efficiency and scalability. It can handle 84 million transactions a day and completes all transactions in under 4.5 seconds. It’s the perfect partner to help Opulous scale at pace as more people become aware of the platform’s ground-breaking potential.
The Algorand blockchain is built around its permissionless Pure Proof-of-Stake protocol, which was developed by two-time Turing Award winner Dr Silvio Micali. Since its inception, Algorand has attracted leading computer science, network and cryptography experts from across the globe and established itself as a major player in the blockchain space.
Alongside partners and investors including Borderless Capital, Somesing, Basic and TrustVerse; Opulous and Algorand are set to revolutionize DeFi.
Join the Opulous platform
Opulous development is currently underway and we expect to launch our MVP within the next 2–3 months.
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