Before we released the Balanced white paper, we did extensive research into existing DeFi platforms so we could find pain points and solve for them.
Balanced won’t be the first DeFi platform, but we do plan on making it the best. Our competitive advantage comes from:
- An easier user experience
- 0% interest rates
- Faster and cheaper transactions
- A clear price tracking mechanism for pegged assets
- Balance Token mining with clear value and ownership rights
On top of everything mentioned above, Balanced is a product built by ICX holders, for ICX holders. Learn more about the benefits of Balanced in Balanced: The one-stop-shop for ICX holders.
1. Easier user experience
Only 1% of people in crypto participate in DeFi, largely due to the poor user experience. There’s so much complexity that even platforms designed to make DeFi easier to manage are inaccessible to the average user.
Our goal is to make Balanced so easy to use that both DeFi experts and crypto newbies can participate with confidence. To do this, we need to simplify the interface as much as possible. There are a lot of variables to be aware of when borrowing from Balanced, but instead of burdening our users with the math, they can use the sliders as their calculator.
Good design is iterative, so we’ll continue to do ongoing testing with both traders and new users. So far, the results have been positive, and we’ll lean more on discussions in our Telegram channel to help us refine the important details as we get closer to launch.
2. 0% interest rates
Many DeFi platforms earn income from the interest accrued by debt holders. This is detrimental to the user, and it also creates a significantly more complex system. With Balanced, there’s no additional cost to holding debt for a long period of time. Borrowers will pay a one-time, 1% origination fee, and nothing more.
3. Faster and cheaper transactions
DeFi is supposed to bank the unbanked, to help the little guy get access to the same financial services as the wealthy. With current DeFi solutions on Ethereum, however, slow and expensive transactions make this impossible.
Balanced operates on the ICON Network: a fast, secure, and decentralized blockchain platform, where transactions don’t get priority based on how much they pay. Transactions are fast and cheap, making Balanced just as accessible to the little guy as it is to everyone else.
4. Clear price tracking mechanism
Similar DeFi platforms maintain the stability of their assets using indirect controls over supply and demand, like interest rate adjustments. Balanced takes a simpler, more direct approach: you can always trade one ICON Dollar for $1 of ICX.
If ICON Dollars ever fall below $1 on an exchange, traders can buy them for cheap and then swap them for $1 worth of ICX (minus a small fee) on Balanced. This guarantees that our assets stay at a steady value, rather than relying on the faith of traders and indirect measures.
5. Balance Token mining
The concept of earning tokens for contributions to a protocol is picking up steam across the DeFi space, but the tokens being earned often have ambiguous value propped up by speculation.
Balanced will be a DAO from the start, owned and operated by users who mine and stake Balance Tokens. All profits earned from fees get distributed to Balance Token holders, and token holders get to make decisions for the platform, like which asset to add next, and adjustments to fees, collateral ratios, interest rates, etc.
When you use Balanced, you’ll own a piece of it.
While Balanced offers a lot of benefits over other DeFi protocols, it’s important that you understand the risks:
- Smart contract risk: We will have audited contracts, but there’s always the possibility of a bug or vulnerability in a smart contract that compromises user funds. It would not be possible to recover them.
- Liquidation risk: If your collateralization ratio drops below 150%, you will lose all your collateral, but you will get to keep any borrowed assets.
- Rebalancing risk: When you deposit ICX into Balanced, it’s used to keep the value of Balanced pegged assets stable (i.e. keeping ICD pegged to $1). Some of your collateral will be sold over time, but it will also lower your debt by an equal amount.
If you’re confused about any of these risks, talk to us on Telegram.