What Is GoldFinch- Is This Cryptocurrency Project Worth the Investment
Access to capital is a key driver of economic and social growth. For years, centralized financial institutions like banks have tried to expand access to credit in a bid to help spur growth around the world. But despite this, there is still a huge percentage of people who remain underserved by the traditional financial systems.
It is now clear that the blockchain could provide the missing link here. Decentralized finance or DeFi is now a huge driver of access to credit and GoldFinch (GFI) is one project that is trying to fill the credit access gap in the world. We will talk more about GoldFinch (GFI) below including what it is, the work that it is doing, and so much more.
What is GoldFinch (GFI)?
GoldFinch (GFI) is a DeFi protocol designed to allow for crypto lending without crypto collateral. The aim is to expand access to capital in emerging markets and make it easier for people around the world to achieve prosperity. Crypto loans are not new. In fact, the decentralized finance industry has been working hard to make them available.
The biggest challenge however has been on the collateral or security. In the past, users had to provide crypto security including assets like BTC to access loans in the form of USD pegged stablecoins. But GoldFinch (GFI) is taking this away from the equation. The move is likely to unlock crypto loans to the real world and enhance the wide-scale adoption of DeFi.
The Team and Backers Behind GoldFinch (GFI)
GoldFinch (GFI) has had a revolving list of team members who have contributed to its growth. Early contributors to the project were drawn from finance, digital loans, and academics focused on financial inclusion. Over 16 early contributors to the project have been identified based on data from the GoldFinch (GFI) site.
The list of backers and investors is also quite incredible. Andreessen Horowitz, one of the most respected names in crypto, is one of the leading investors in GoldFinch (GFI. Other major names include Coinbase Ventures, Mercy Corps, Access Ventures, Sybil Capital, Variant, SVAngel, among others.
Why is GoldFinch (GFI) Unique?
There are many DeFi projects out there that want to democratize access to finance. But DeFi has run into many challenges. Nonetheless, GoldFinch (GFI) is a unique case and there is huge potential for this project. Here is why:
GoldFinch (GFI) has basically solved the biggest barrier for crypto lending. Just think about it. If you are asking people to raise crypto collateral to access decentralized credit, it means they will have to own things like BTC, ETH, or other supported digital assets. Sadly, not many average people in emerging economies own crypto.
Besides, it costs money to own such collateral. DeFi aims to bring financial services to people who are traditionally underserved by banks. It is illogical to expect that the same people will have enough money to buy crypto. GoldFinch (GFI) has taken away that burden. It is now making it possible for anyone to get access to crypto loans.
When you see a project getting backed by Mercy Corps, then you understand the kind of humanitarian impact it has. Access to credit and financial inclusion, especially in emerging economies, can be a huge driver of economic prosperity. GoldFinch (GFI) is simply stepping in to solve a real-life problem. By providing simple crypto loans, GoldFinch (GFI) could play a huge role in lifting millions of people out of poverty.
GoldFinch (GFI) is built to be able to open its service to tens of millions of people. It is a highly scalable DeFi protocol that can easily cope with the demand for credit anywhere in the world. This means that there are no limits to its growth potential.
GoldFinch – the Roadmap
GoldFinch’s plan to unlock uncollateralized crypto loans for emerging markets is going to take three phases. Here they are:
Credit Funding with Crypto
This involves building the capital capabilities that will make it easier for GoldFinch to extend loans to lending businesses. It is simply building “crypto reserves” that allow the protocol to be as liquid as possible.
Decentralized Underwriter Network
Secondly, GoldFinch will focus on building a network of decentralized underwriters around the world. This is a crucial component of its operational plan because it will help broader risk assessment and credit issuance.
The third phase will now be to extend credit to lending businesses that have already been recruited as part of GoldFinch’s decentralized network of underwriters. The goal is to bring end user loans on-chain by leveraging a robust marketplace of proven underwriters.
How Does GoldFinch (GFI) Work?
Instead of relying on security or collateral, GoldFinch (GFI) has introduced what it calls “trust through consensus “. In essence, GoldFinch simply decentralizes underwriting and gives the community the power to assess risk. Underwriting is the most expensive part of lending. By decentralizing it, it means end users can access cheap loans from decentralized entities that work as part of the GoldFinch Protocol.
GoldFinch (GFI) also allows people or investors to contribute capital for lending through liquidity pools. The Senior Pool is the main source of capital. However, even though everyone is free to supply the capital to the Senior pool, the decision to allocate money to borrowing pools is made only by backers.
Investing In GoldFinch (GFI)
There are two ways to invest in GoldFinch (GFI) for decent returns. The first one is through staking where you provide liquidity for the Senior lending pool. The expected annual yield for staking ranges from 10 – 14%. You can also buy the native utility token GFI. Let’s talk more about GFI and what it has to offer below.
GFI Token – Tokenomics
The GFI token is the main utility token for the GoldFinch Protocol. The token has already started vesting for governance and liquidity mining. Liquidity providers are expected to get around 16% of the total supply of GFI.
Backers on the other hand get 8% while early supporters of the protocol will get an allocation of 21.6%. There will also be a 14% allocation to the treasury, 28.4% for the early and future team, and 4.4% for Warbler Labs. Auditors and Borrowers will get 3% each while other contributors will get 0.7%.
Is GoldFinch (GFI) A Good Buy?
Goldfinch looks like one of the most promising DeFi projects in the world right now. The following are some of the reasons why:
Backing and Investment
GoldFinch has a stellar team of backers and the project has in fact managed to raise a lot of money. The protocol managed to raise around $11 million in Series A funding. The funding round was actually led by Andreessen Horowitz, a huge VC firm in the US. The venture capital firm also led another round of investment where GoldFinch raised another $25 million to finance its expansion in 2021.
So far, GoldFinch has also reported insane growth. Data from the protocol showed that in 2021, the value of active loans issued by the project was doubling every two months. In just 12 months, active loans went from $250, 000 to $39 million. As of now, GoldFinch has financed over 200, 000 people drawn from 18 countries. These countries are mostly in emerging markets with Kenya leading with nearly 25% of all loans issued.
The main reason why GoldFinch has so much potential is based on its no collateral lending approach. This is likely to make it a go-to protocol for DeFi lending, something that will play a key role in its future growth.
GoldFinch is a project that opens up access to finance to people who have largely been ignored by traditional centralized finance. The DeFi protocol does this by lowering the barriers of entry needed to access a crypto loan. The fact that we are seeing explosive growth in the loan portfolio suggests the future is bright. It’s a DeFi project worth checking out.
* We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.