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Project Insight: Multiplier

DeFi is an ever-evolving sector. New projects often build on the success of a predecessor. The Multiplier Project, derived from Aave, seeks to extend the successes of Aave to flash loans and decentralized lending.

Introduction

One novel financial service gaining traction in DeFi is what is known as Flash Loans. These are loans that do not require collateral to initiate a borrow. The only requirement is that the loan must be repaid within the same transaction block. This service is of great interest to arbitrage traders. Arbitrage traders try to make a profit by simultaneously trading an asset on two or more markets where the price of that asset is not the same.

Several platforms offering flash loans have recorded reasonably good success. One of the leaders in the industry, Aave was reported to have processed over $1.5 billion of loans within 10 months of starting to offer the service.


What Is The Multiplier Protocol?

Multiplier Protocol is a crypto lending platform. It started off in 2019 initially as a centralized finance (CEFI) platform but eventually ventured into offering decentralized products. The main vision of Multiplier is to use blockchain technology to make finance simpler for everyone. 

As proof of its reputation, Multiplier Protocol is licensed to operate as a regulated financial services provider in Switzerland and Hong Kong. It has also been able to seal partnerships with some flagship companies such as Coinbase Custody. 

Multiplier’s initial DeFi projects were TakoSwap and Simplified Stable Bonds (SSB), which were built on the Ethereum blockchain. In February 2021, Multiplier migrated its lending protocol to the Binance Smart Chain (BSC) and launched the Multi-Chain Lend (MCL).

Multi-Chain Lend

MCL is a decentralized lending protocol. Multiplier Finance developed it in collaboration with a renowned cybersecurity firm, Bramah Systems. The core objective behind MCL is the provision of secure credit services to the large BSC community. MCL is also the first lending protocol to offer flash loans on the SC. 

MCL was forked from the Aave Protocol, but whereas Aave is an Ethereum-based protocol. MCL offers cheaper flash loan rates as well as shares more revenue to its users than Aave does. Investors earn interest by committing their assets to lending pools, from which funds are made available to borrowers. MCL also leverages the Binance Smart Chain to deliver faster transactions with lower gas fees.

Features of Multi-Chain Lend

  1. It uses an algorithmic market model. Both Stable and variable interest rates are available to borrowers. 
  2. It advertises itself as a secure platform. The protocol’s smart contracts have been audited by reputable blockchain security companies, CertiK and Bramah Systems. 
  3. Offers conventional DeFi lending as well as flash loans. 
  4. Users can leverage on BSC’s fast speed and low gas fees. This will be of particular benefit in flash loans.

How It Works

The Multi-Chain Lend protocol has seven structures that work together as an ecosystem. These are:

  1. Lenders

These are users who support the protocol by donating their assets to a pool controlled by a smart contract. A user could then use his deposited assets as either collateral or liquidity. 

  1. Borrowers

They are users who borrow assets from the system. To be able to borrow, they would need to provide other assets as collateral except in requests for flash loans in which case collateral is not required. 

  1. Repayment and Withdrawal

The protocol allows either party to partially or totally close their exposure. 

  1. Flash Loans

Multi-Chain Lend supports flash loans. A borrower can borrow assets from the pool without having to provide any collateral. The only caveat is that the borrowed assets and accrued interest must be paid back in the same blockchain transaction.

  1. Governance

Multi-Chain Lend is designed to be community-driven. The platform’s native token will give holders the rights to take part in making decisions about the protocol’s development.

  1. Incentives and Rewards

Participants in the lending pool earn interest from the rate charged to borrowers and other fees earned by the protocol. 

  1. Multi-Chain

The protocol began as a Centralized Finance provider (CEFI) on the Ethereum blockchain and expanded to DeFi on the Binance Smart Chain. MCL supports multichain interoperability by having a mechanism for converting CEFI platform tokens(MXX) to DeFi’s (bMXX), and vice versa.

Multi-Chain Lend Tokenomics

The native token of the MCL protocol is the bMXX. It is the governance token for the platform. 

$bMXX has a total supply of 13,000,000 and is trading on the decentralized exchange, Pancakeswap. 

To acquire governance privileges, holders are required to stake their bMXX in the governance pool. When they do so, they will also be eligible to share a portion of the protocol’s revenue etc. Here is further information about bMXX.

Future Plans

So far, the Multiplier Protocol’s development team has accomplished several milestones. These include launching its automated market maker (AMM) decentralized exchange, TakoSwap, and being audited by first-class security and audit company, Certik.

Other plans for the immediate future are

1. Integration of the protocol’s tokens with more DEX wallets. 

2. Increase collaboration with partners to boost adoption. 

3. Provide Software Development Kits(SDK) and other incentives to encourage developers build apps for the platform.

More details about the platform’s projections can be found here.

Conclusion

Multi-Chain Lend is the first platform to offer flash loans on the ever-expanding Binance Smart Chain network. While Flash loans are generating growing interest in DeFi, The Binance Smart Chain is witnessing lots of users and developers migrating to its platform. Multi-Chain Lend is well-positioned to leverage the Binance Smart Chain and become a successful project.

For more information about Multiplier Protocol and Multi-Chain Lend, visit the protocol’s media pages

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GitHub

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