Flux Finance, a decentralized finance (DeFi) platform that provides many decentralized services, such as lending, borrowing, and trading, is introducing a lending protocol allowing users to deposit USD Coin (USDC) or DAI, a stablecoin, into Flux’s protocol.
On February 8, Flux took to Twitter to announce the company is live bringing yield from US Treasuries to investors all over the globe. The primary objective of the decentralized lending protocol is to connect both on-chain and off-chain worlds by supporting permissionless assets like stablecoins as well as permissioned assets like tokenized securities.
1/ We are delighted to announce that Flux Finance is live! Flux is bringing US Treasuries yield on-chain to permissionless lenders everywhere, creating the substrate upon which a new on-chain economy can form. https://t.co/c7i6mqpfy8
— Flux Finance (@FluxDeFi) February 8, 2023
How will Users Benefit from the New Feature?
The new offering will allow lenders to supply stablecoins such as USDC and DAI to earn yield, while borrowers can pledge tokenized treasuries as collateral. This will be backed by Ondo Finance’s U.S. Treasury-backed Government Bond Fund (OUSG), that will allow users to receive fUSDC or fDAI, two derivative tokens representing the USDC and DAI on Flux.
Moreover, users will be able to enjoy various benefits as Flux uses smart contracts instead of middlemen to provide the financial services. The Defi platform explained,
“Flux is leveling the playing field. Any investor, with any check size, anywhere in the world, can now access yield from US Treasuries. This yield comes in the form of a stablecoin loan against OUSG, a form of tokenized US Treasuries from OndoFinance”
4/ Lenders can earn interest on their stablecoins by supplying them to Flux. Those stablecoins can only be borrowed by users who post OUSG as collateral to Flux. Supply and borrow rates are algorithmically determined based on supply and demand, similar to Compound.
— Flux Finance (@FluxDeFi) February 8, 2023
According to the official blogpost, the two derivative tokens “fUSDC” and “fDAI” will serve as building blocks for other protocols that will be supported at decentralized exchanges (DEX) and utilized as collateral at lending and derivatives protocols.
All this is similar to how liquid staking protocols like Lido issue tokens such as stETH, which represent ether staked on their platforms at a 1:1 ratio, and can be used for yield farming. Flux wrote,
“We also anticipate custodial platforms like neobanks and centralized exchanges will support fUSDC for their users. Anyone can integrate fTokens freely.”
What is Flux?
Flux is an autonomous, transparent and decentralized lending protocol and was developed by Ondo Finance, a US-based software development and asset management firm. Ondo Finance also developed the ONDO tokens, which will be used to govern Flux Finance. However, it is now an autonomous protocol with upgrades governed by ONDO holders via the Ondo DAO.
ONDO token holders will vote to select the supported assets and relevant parameters for the initial markets on Flux. The primary objective of Flux Finance is to promote the advancement of a more transparent and open financial system through the use of blockchain technology.
