CoinMarketCap takes a deep dive into Beta Finance (BETA) a platform that aims to innovate the crypto-financial markets by offsetting crypto volatility and bringing market stability.
Beta Finance (BETA)
protocol runs on an isolated collateral model
, serving as a gateway to the money market for DeFi users who can have unrestricted access to digital tokens that run on permissionless protocols.
Users can borrow, lend,or short crypto assets on the Binance Finance protocol. Beta Finance is currently set up on the Ethereum Mainnet
— users who want to use the platform require a digital wallet that is connected to the Ethereum mainnet, such as Metamask, Coinbase and others.
Beta Finance works on an isolated collateral model, which eliminates any use of cross-collateralization. This aims to provide a safe pocket to the investors who use the borrowing amount to diversify their holdings.
Consider a scenario where 15 ETH is used as collateral, with 6.5 ETH allocated to short-selling $ADA
and 8.5 ETH to short-selling $XRP
. Now, if the price of $ADA spikes and puts the user’s 6.5 ETH at risk of liquidation, the other 8.5 ETH linked with the $XRP position will not be liquidated.
This is the core benefit of an isolated model where one asset liquidation risk doesn't pose any threat to the entire protocol and remains free of market, counterparty and smart-contract risks and threats.
The main objective behind the creation of the Beta Finance (BETA) protocol is to stick to the DeFi ethos of ''Open Finance For All,'' countering the two main problems in the world of decentralized finance (DeFi).
As highlighted in BETA's official whitepaper
, these two problems include price volatility and a lack of financial infrastructure
in DeFi. The Beta Finance protocol aims to empower DeFi users to stand against the price volatility mechanism by equipping them with the feature of shorting assets. The BETA protocol also aims to scale its money market protocol with time to give its users the freedom to develop money markets anytime.
On the Beta Finance (BETA) protocol, lenders can lend their assets for any money markets that are available on Beta Finance. When assets are deposited on Beta Finance's money markets, bTokens are given to the lender, representing the share of interest that the lender will receive from their underlying tokens.
By lending their assets, users can earn yield from the lending interest rate. The lending mechanism works in a simple manner. The borrowers and the short sellers pay the borrow interest rate, which is paid to the lender of the asset. There is a separate lending pool for each token, providing a layer of protection to the lenders and a guarantee of earning the maximum amount or yield on Beta Finance through the tokens deposited on the Beta Finance platform.
Borrowers who want to use collateral to enter a borrow position on Beta Finance can only do so if the loan-to-value (LTV) ratio is below the safety parameters of the particular asset tier for which the borrow position needs to be initiated.
The LTV ratio is calculated through the following formula:
Short selling follows the same principle on Beta Finance as the borrowing mechanism does. Short sellers can use supported collateral to enter short positions and have the option to leverage a borrow on the Beta Finance platform and sell the borrowed token.
As highlighted above, Beta Finance (BETA) protocol works on an isolated collateral model which means that liquidation of a single asset doesn't have an impact on the entire protocol. This is a part of the risk framework offered by the Beta Finance platform.
The support for collaterals is also determined based on their liquidity ratios; for example, high liquid assets will have higher collateral factors as compared to crypto-assets with lower liquidity. Currently, the Beta Finance protocol supports USDT, USDC, DAI, and ETH with 90%, 90%, 90% and 80% collateral factors respectively.
There is also a scalable asset tier model that allocates assets into different tiers based on their liquidation LTV, safety loan-to-value (LTV), and liquidation bonus tokens.
As per the official announcement of Binance, the Beta Finance (BETA) token will have the following breakdown:
Total token supply: 1,000,000,000 BETA
Launchpad hard cap of 3,000,000 USD
Public sale token price: 1 BETA = 0.06 USD (price in BNB will be determined prior to subscription)
Hard cap per user: 20,000 USD (333,333.33 BETA)
Total tokens allocated to Binance Launchpad: 50,000,000 BETA (5% of Total Token Supply)
Token sale format: Subscription
Supported sessions: BNB only
For more details about the official announcement, click here
Beta Finance (BETA) token distribution is set to launch on Oct. 8, 2021, after which a final price will be determined.
The isolated collateral model is a unique offering in the world of cryptocurrencies. There are not many platforms that offer the same benefits that Beta Finance (BETA) protocol aims to provide in the world of decentralized finance (DeFi)
. The features of lending, borrowing and short-selling combined into one platform could become an attractive feature of the Beta Finance platform and allow the vast community of DeFi to sign up on the Beta Finance platform.
Beta Finance (BETA) is backed by Binance, which is the largest cryptocurrency exchange in the world. The Beta Finance (BETA) project is the 21st project of the Binance Launchpad. Binance Launchpad is a Binance-owned crowdfunding platform that fully backs crypto-startups and marketing the token on its crypto exchange platform to millions of crypto users.
Previous projects from Binance Launchpad
include Axie Infinity
, Lab Sandbox, Safepal Tokocrypto, Injective Protocol and Alpha Finance, all of which have shown significant progress since their inception on the Binance exchange. AXS is currently leading from the front as it has hit its all-time high of $155.08 in the past 24 hours. The great progress of projects that launch on the Binance Launchpad indicates that the BETA token is likely to have a big start once the token distribution starts on Oct. 8, 2021.
As of now, the BETA token hasn’t launched, so price speculation at this point is not possible. However, with the current crypto market showing some form of bearish signs, as the king of crypto, Bitcoin (BTC) trying to break the 50k zone, and if this happens on Oct. 8, the launch of the BETA token and its price could surprise many people in the crypto markets.
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