Analysis of CREDI token and its role in the DeFi ecosystem

The rise of DeFi (Decentralized Finance) sector of the crypto industry has brought true banking service to the crypto world in a fully decentralized manner. Users are now no longer limited to only making decentralized payments. Instead, they can use DeFi to participate in numerous activities meant for improving the work of crypto networks, while simultaneously it grants users the ability to earn funds in a risk-free environment.

This includes plenty of popular activities, such as staking, yield farming, lending/borrowing, and more. New projects constantly keep coming out, trying to make these activities as profitable for the users, while also making them as useful for the network as possible. One example is Credefi, which calls itself the world’s most advanced crypto P2P lending platform.

What is Credefi?

Credefi is a DeFi project — a lending platform that combines traditional finance and DeFi, and in doing so, creates a hybrid project centered around its lending functionality and its token CREDI.

CREDI actually plays a huge role in the project’s ecosystem, as it will allow token holders the ability to invest stablecoins into different portfolios, depending on the level of risk they are ready to take. The platform will, in turn, provide a risk assessment and credit score data to the investors, thus giving them the chance and the means to make an informed decision. 

CREDI is also only one of the tokens here, in a system that is actually based on two of them. With CREDI being the first one, xCREDI would be its counterpart. 

Regular CREDI would be an inflationary token, used for rewards on the platform. This is a simple enough purpose that will always remain a good use case. As for xCREDI, this is a token that serves as a variable supply, but is deflationary in the long run. It gets created whenever CREDI gets burned in the security module, and the Credify ecosystem stabilizes as a result.

Details About CREDI and xCREDI

CREDI would act as the project’s main token. As mentioned, it will be used for rewards on the platform, and this is also the token used in the token sale. However, it was designed in a way that will give it a perpetual inflation of -5% per year, depending on the overall CREDI supply.

Apart from simply being used as a reward, CREDI also has other tasks, such as increasing the project’s security. Essentially, the token adds a security layer for the issued loans on the platform, as users who want to get xCREDI first have to deposit their CREDI into the security module of the platform. Any CREDI that gets into the module can also be used by the platform to remunerate lending liquidity providers, just in case a loan on the platform ever goes into default and liquidation. 

Meanwhile, users can obtain CREDI by buying it during the token sale, purchasing it from Uniswap via the CREDI/DAI liquidity pool, or earn it as a reward for lending liquidity for the platform, liquidity pool, or the xCREDI/DAI liquidity pool. After obtaining the token, users will be free to keep it and provide liquidity for more rewards, sell it on Uniswap, or convert it to xCREDI and then use this token further.

Owning xCREDI brings its own benefits, of course, including the ability to participate in the platform’s governance, provide liquidity and get rewards, or simply trade it on Uniswap DEX. The project expects that there will be a continuous demand for xCREDI due to the LP program and buybacks, so there should be no shortage of users willing to buy the token via the DEX.