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02 Feb 2024

2 min read

Folks Finance - Case Study

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Challenge

Folks Finance is a non-custodial borrowing and lending protocol that operates on the Algorand blockchain. Folks Finance also introduces the concept of Liquid Governance. Since the introduction of Algorand’s decentralized governance, users must commit their ALGO for a 3 month period to become a governor. During this time, users must maintain their ALGO balance above their committed amount in order to be eligible for rewards, making their ALGO illiquid and effectively locked. This limits users to holding their tokens on Algorand without the option to deploy them in DeFi applications and increase capital efficiency by interacting in other ecosystems.

Solution

Folks Finance's Cross-Chain Liquid Governance system aims to solve this problem by introducing a new cross-chain staking derivative for ALGO, powered by Wormhole Messaging. xALGO, a multichain asset powered by Wormhole, brings the first Algorand Liquid Staking Token (LST) to the DeFi ecosystems of BNB Chain and now, Avalanche. This allows users to interact with apps in these ecosystems, while continuing to participate in governance on Algorand. 

Results

The launch of xALGO created the first cross-chain DeFi product between BNB Chain and Algorand, increasing liquidity and activity across both ecosystems. It enabled BNB users to interact with an Algorand product for the first time and allowed ALGO holders to explore the BNB ecosystem, expanding the user base and utility of Folks Finance products. xALGO went live on BNB Chain in May 2023, and Avalanche is now the second chain to welcome the premier ALGO liquid staking solution. Powered by Wormhole technology, this is the first Avalanche-Algorand cross-chain DeFi product available.


About Wormhole

Wormhole is the leading interoperability platform that powers multichain applications and bridges at scale. Wormhole provides developers access to liquidity and users on over 30 of the leading blockchain networks, enabling use cases that span DeFi, NFTs, governance, and more.

The wider Wormhole network is trusted and used by teams like Circle and Uniswap, and to date, the platform has facilitated the transfer of over 35 billion dollars through over 900 millions cross-chain messages. To learn more about Wormhole, visit the wormhole website, Twitter, Discord, or blog.

About Folks Finance:

Folks Finance is a DeFi hub pioneering innovations in lending, borrowing, trading, and managing of digital assets.

Folks Finance streamlines the DeFi experience with a UI and UX competitive to centralized exchanges, all while running on permissionless smart contract technology.

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