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Folks Finance xGov Proposal

The xGov platform is now live! This has been a long awaited update and implementation, since the first mention of the program back in Governance period 2 back in January 2022. The implementation exceeded my expectations and it’s thrilling to see the ecosystem propose solutions they believe Algorand will benefit from and some of the most engaged users vote to support. Today I’m going to spend time talking about a specific proposal made by Folks Finance.

Decentralized NFT Lending Platform

The proposal outlines a project by Folks Finance to develop a decentralized NFT lending platform on the Algorand blockchain. The aim is to integrate NFTs (non-fungible tokens) into lending and borrowing operations, leveraging Algorand’s ASA technology. The proposal highlights the lack of financial tools for NFTs on the platform and aims to fill this gap. The project will consist of a peer-to-peer market and a peer-to-pool market, providing flexibility and liquidity to participants.

Read the proposal here.

The development plan is divided into several milestones:

Milestone 1 (NFT lending: Peer-to-peer market):

  • Date: 12/29/2023
  • Duration: 13 weeks
  • Amount: 985,000 ALGO
  • Description: Develop a smart contract and web-app for user-to-user loans collateralized by NFTs. The contract will manage borrowers’ asks, lenders’ bids, loans, and liquidation processes. Features include bond NFTs representing lenders’ positions, debt NFTs/collateral listings for borrowers, multi-collateral and mixed collateral support, multi-borrowing, and a grace period for debt repayment.

Milestone 2 (NFT auction smart contract):

  • Date: 05/20/2024
  • Duration: 7 weeks
  • Amount: 440,000 ALGO
  • Description: Develop a smart contract for auctioning off NFTs in case of borrower default. An SDK will be provided for integration with Algorand ecosystem marketplaces.

Milestone 3 (NFT lending: Peer-to-pool market):

  • Date: 03/07/2025
  • Duration: 18 weeks
  • Amount: 1,700,000 ALGO
  • Description: Research, design, and develop contracts for the peer-to-pool market. This market allows lenders to deposit ASAs into pools for interest and borrowers to collateralize NFTs for instant loans. Whitelisted NFT collections will be eligible.

The proposal emphasizes the benefits to the Algorand community, highlighting the need for financial tools to unlock the value of tokenized assets, particularly NFTs. The project is expected to empower lenders to earn interest and borrowers to access illiquid value. NFT-based projects and marketplaces on Algorand are expected to benefit from increased utility and revenue. Additionally, the proposal underlines the importance of being prepared for the growing shift of the economy onto the blockchain.

The Folks Finance team members are introduced, and their experience with Algorand is highlighted. The team is recognized for its innovative DeFi products and expertise in both technical development and marketing. The proposal is open-source, allowing other projects to integrate the technology and promote growth within the Algorand ecosystem.