Key takeaways
- EasyFi is a DeFi lending protocol built on Polygon (formerly Matic) Layer 2 to reduce transaction costs from potentially thousands of dollars to under one dollar.
- The platform offers differentiated features including under-collateralized and uncollateralized loans with innovative collateralization options beyond standard lending platforms.
- EasyFi is designed as a multi-chain, multi-layer solution that will expand beyond Polygon to other networks like Binance Smart Chain based on liquidity availability.
- The Do More with DeFi campaign educates users on leveraging their crypto assets for better returns through partnerships like Boring DAO.
- Layer 2 solutions require brief onboarding delays of five to thirty minutes when moving tokens between Ethereum and Polygon, but this friction is gradually improving.
Why EasyFi chose a layer 2
Ashton Addison: What is EasyFi, and what is it trying to do?▶ 00:19
Ankitt Gaur: EasyFi is a lending protocol built on Matic, which is now Polygon, a layer 2 blockchain. DeFi has an enormous supply of capital, but the avenues for depositing it in a trusted, decentralized way are still largely unexplored. That is the journey we started with EasyFi. The first challenge was the gas problem. We saw that it would get worse rather than better, so we chose a layer 2 approach instead of launching on Ethereum. Like any initiative, that has some downsides, but it's part of the deal, and things are getting better on layer 2. The bigger objective is adoption on the borrowing side of lending marketplaces and money markets. We want to build more interesting ways for people to use their existing digital assets and take loans for their various needs.
Ashton: Does a layer 2 change the process for people lending and borrowing, and does it make things easier or harder?▶ 03:28
Ankitt: Right now, all layer 2 solutions on Ethereum have a bit of an onboarding hitch. But once you move over and are comfortable, the cost of a transaction goes down tremendously. Say you take a loan against your ETH, use the dollars to buy LINK, then sell the LINK to repay the loan and free your ETH. These six transactions on Ethereum will cost you maybe a thousand dollars today, given the ETH price and the gas congestion. On Polygon you can do the same with EasyFi and a DEX called QuickSwap. If you consider EasyFi the Compound of Polygon and QuickSwap the Uniswap of Polygon, you can get these transactions done for a dollar or less.
These six transactions on Ethereum will cost you maybe a thousand dollars today, given the ETH price and the gas congestion.
Bridging delays and a multi-chain future
Ashton: What are the downsides of moving between Ethereum and Polygon?▶ 05:24
Ankitt: Not everything is rosy. When people move tokens from Ethereum to Matic, there is a delay of five to ten minutes. Moving from Polygon back to Ethereum can sometimes take up to 30 minutes. That is a gap, but it is gradually being solved, as Polygon is working on various initiatives to simplify the problem. The same applies to Binance Smart Chain. Costs there are very low, and the delay comes when you move assets over from Ethereum.
Ashton: Where do you see this heading for users?▶ 06:15
Ankitt: The ideal situation, which I think the DeFi industry should reach in 12 months or so, is that you don't know where your swaps are getting done. All you get is the best gas fees. ParaSwap, Kyber and similar companies gave you the best rates across multiple exchanges. Imagine going to a platform and saying you want to swap ETH to USDC at the lowest gas cost, without knowing whether it happens on Binance Smart Chain, Ethereum or Matic. That is the ideal world for a user. EasyFi is not just about Polygon. It is a multi-layer, multi-chain product, conceived as a universal layer 2 solution. Today it is on Polygon, tomorrow it will expand to Binance Smart Chain, and wherever the liquidity is, it is one single thing for the user.
Doing more with your collateral
Ashton: What is the "Do More with DeFi" campaign, and what are its goals?▶ 08:35
Ankitt: It was built to give people more options for what they can do with their assets, especially in the bull run. It also educates them on things many people don't know about. Most people in crypto markets aren't DeFi natives, and they don't know how to leverage their holdings to get more returns. The first partnership under the campaign was with BoringDAO, which is a rail that connects non-ERC20 tokens to the ERC20 ecosystem. Communities of LTC, Bitcoin Cash and others can participate in DeFi through it. Say you hold Bitcoin Cash and want to keep your position. You can't put it as collateral on an ERC20 platform directly. With BoringDAO you bring it in, get it wrapped on ERC20, put it as collateral on EasyFi and take a loan against it. That gives you liquidity to use in the bull run.
Ashton: You also started accepting staked derivative assets. Why does that matter?▶ 10:17
Ankitt: It is an initiative very close to my heart, because it makes use of the value of assets locked in proof-of-stake blockchains. The industry is moving from proof-of-work chains like Bitcoin, Litecoin and Ethereum towards proof-of-stake chains like Polygon and Binance Smart Chain, and Ethereum 2.0 as well. When you deposit assets for staking, it is like a fixed deposit: you earn a return on top. Liquid staking companies then came along and gave you a derivative token as proof of your stake. But you need avenues to use that token. EasyFi provides one. You can stake your Matic, keep earning staking rewards, bring the derivative Matic token to EasyFi, put it up as collateral and take USDT. It's a double win.
Many people in crypto have been doing random partnerships just for the sake of partnerships.
The EASY token, strategy and the liquidity challenge
Ashton: What role does the EASY token play on the platform?▶ 12:44
Ankitt: One of its most important functions is governance. As we go multi-chain, it will also act as a settlement instrument across chains, because transactions will have to happen in real time. EASY will play an important role as a cross-chain settlement currency. There are also incentivization programs we are running for the community, covering staking, community incentives and user acquisition.
Ashton: What is coming next on the roadmap, and what sets EasyFi apart from other lenders?▶ 13:55
Ankitt: Everything we do is driven through a framework. Many people in crypto have been doing random partnerships just for the sake of partnerships. EasyFi is very selective, and every partnership is aligned with a particular campaign or initiative. We recently did two partnerships with liquid staking companies, and we have a couple more lined up. The aim is to let people bring derivative tokens from more platforms and use them as collateral for loans. A big differentiator between Compound, Aave or Cream Finance and EasyFi is the collateral options, which are not available anywhere else. Many people ask why we don't list this or that token. If you just want to lend BTC and borrow USDT, you have Compound. EasyFi is supposed to make a difference. Tell me one lending platform that lets you use derivative assets as collateral and gives you USDT. No one.
Ashton: What challenges do you expect as you push towards mainstream adoption?▶ 16:15
Ankitt: We took on these challenges by choosing to go with layer 2, because that is where the industry is heading. The biggest challenge is sourcing liquidity for the protocol. We had an innovative incentivization program, and we gave out 30 million dollars' worth of loans in the first 36 hours, which no layer 2 platform has ever done. People clearly had the appetite, but they need to be incentivized better. When we stopped the rewards, the liquidity died down and people moved on. So a continuous supply of money from layer 1 to layer 2 is a challenge, and I'm confident it will be solved. We are first setting the whole machinery up. Once it is in place, we will bring in liquidity as fuel through various incentivization programs, and then the machine runs.
This interview has been edited for length and clarity. Recorded February 2021.
