HiFi Finance price has caught a majority of crypto traders by surprise today after jumping 70% at press time and still going. HIFI, the native token of the decentralized finance protocol HiFi Finance, is among today’s top gainers as the global crypto market cap is dropped by 2.97%.
The main reason for today’s HIFI price surge is the NFT collateral status update that HiFi Finance made today.
What is HiFi Finance?
For those who it is their first time coming across HiFi Finance, it is a DeFi protocol that allows users to lend and borrow cryptocurrencies at a fixed rate. It was originally known as Mainframe when it launched in 2017. Mainframe began as a decentralized communications layer for Web3 before pivoting to Decentralized Finance and rebranding to HiFi in early 2020.
It uses an Automated Market Maker (AMM) model where users supply tokens to liquidity pools and then an algorithm sets the interest rate based on the supply and demand.
The liquidity providers supplying liquidity (tokens) to the liquidity pools earn rewards while enabling peer-to-peer (P2P) lending and borrowing.
In addition to supplying liquidity, borrowing, and lending, users can also participate in HiFi Governance where users use the HIFI token to vote on proposals by staking the token. The delegates’ voting rights are automatically adjusted depending on the amount of staked HIFI tokens.
HiFi Finance NFT collateral status update
HiFi Finance recently announced that they are working on enabling NFTs as collateral and today’s post on their website highlighted how far they are with their project of allowing users to borrow against NFTs.
In the blog post, the HiFi Finance team states:
“Our latest blog post introduces Pooled NFT v2 and discusses how it solves the stuck NFTs in the current version. V2 will add permissions and elegantly manages this edge case. Our team can remove the last NFT, sell it, and disperse the proceeds to the pool token holders’ pro-rata.”
They however went ahead to state that while it was technically possible to allow borrowing against NFTs at the moment, they have “opted to wait until the new version of Pooled NFT goes live before doing so.”
They also said that they “want to avoid creating additional incentives to add collections to v1 of Pooled NFT. Additionally, managing a migration with active borrowing unnecessarily splits liquidity and overcomplicates the upgrade and migration process for pooled NFTs.”
Once the team is completed with the smart contract and front-end work, they will proceed with a proposal for adding pooled NFTs as collateral for the delegates to vote.
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