Born for Lending: How Does Beta Finance Reduce Volatility of the Crypto Market?

As the market cap of cryptocurrencies continues to rise, the crypto market has remained highly volatile. Though the high volatility is favored by some professional investors, for most DeFi users, a volatile market means high transaction risks, which go against their long-term interests. At the same time, volatility also leads to adverse market conditions like excessive leverage, panic selling, and concentrated liquidation, which hinder the stable growth of DeFi ecosystems over the long run.

In the DeFi community, many believe short-selling to be a force that balances price fluctuations and is a key component of the DeFi infrastructure and that convenient asset management for short positions will protect DeFi users from the volatility of prices. Besides, in over 90% of the DeFi protocols with active crypto trades, token holders now have little chance to earn stable additional profits.

This background triggered the emergence of Beta Finance.

What is Beta Finance?

Beta Finance, a DeFi protocol, allows users to lend, borrow, and short crypto assets on the platform. It aims to offset the volatility and risks of the crypto market by functioning as a permissionless money market that incorporates the lending and short-selling of assets. Focusing on the long tail of crypto assets, Beta Finance promotes the extensive and long-term adoption of DeFi among individuals and institutions while empowering them to earn steady yields.

The most important functions of Beta Finance are lending & borrowing:

1. Borrowers can deposit collaterals to borrow tokens that will be directly deposited into the corresponding crypto wallet such as MetaMask. Borrowers are free to use the borrowed tokens at all times.
2. Borrowers can also add collaterals to short their crypto assets in the platform’s token money market. According to its plan, initially, Beta Finance will be supporting ETH, USDC, USDT, and DAI as valid collateral, with the availability for its community to propose and vote for additional collateral support in later stages.
3. Similarly, lenders can also deposit tokens into the Beta market for additional yield. Once tokens are borrowed by other users, lenders will obtain bTokens that represent their stake in the interest accruing in the lending pools.
4. Lenders can convert their bTokens into the original deposit and the accrued interest in the lending pool. There is a single lending pool for each token, which means that lenders are more likely to earn high yields on Beta Finance.

In addition to lenders and borrowers, there are also traders and liquidators on Beta Finance. Liquidators can earn a premium bounty reward by monitoring and liquidating under-collateralized short positions.

Beta Finance has built an all-inclusive and one-stop short-selling tool that allows DeFi users to initiate and manage the short positions of all tokens. With the relevant indicators such as price impact and slippage that are readily available on the platform, users can manage and update their positions with great ease.

In addition, all users can create money markets for any ERC-20 token on Beta Finance without any permission. To support highly volatile assets, Beta Finance has introduced an isolated collateral model so that users are only liable for collaterals that directly relate to their positions.

What is BETA?

BETA is Beta Finance’s native utility token and has the following functions:

1. Staking incentives: BETA token holders can stake their BETA on the protocol and receive the corresponding incentive revenue.
2. Yield farming: Liquidity providers can stake their assets into the lending pools for borrowing and short selling and receive a share of BETA tokens that is adjusted based on a user’s relative contribution and additional parameters.
3. Governance: BETA token holders will be able to participate in the voting and governance of the platform. Through governance, BETA token holders can modify product features and key parameters of Beta Finance, which will allow them to influence the direction of the protocol’s development.

It is noteworthy that Beta Finance provides money markets that securely cover all types of tokens by focusing on the shorting demand of long-tail assets.

Meanwhile, the permissionless feature of the protocol allows all users to create money markets for crypto assets wherever they are and whenever they want to. As DeFi ecosystems become increasingly developed, there will be more crypto markets on Beta Finance. 

Incubated by Alpha Finance Lab, Beta Finance has obtained investment from Spartan Group, ParaFi Capital, Multicoin Capital, DeFiance Capital, and Delphi Digital.