In my recent post, I talked about Mirror Protocol and how it is harnessing the power of synthetic assets (mAssets) to enable users trade blue-chip stocks from anywhere across the globe using cryptocurrencies. Synthetic assets replicate the value of digital assets and help the crypto platforms provide numerous features to the users.
Linear Finance is one such platform that has pledged to build an efficient and stable platform that addresses the loopholes of existing CeFi and DeFi players, all by using synthetic assets powered by LINA token. Backed by an experienced team, can Linear change the way how DeFi operates? Is LINA the next moon token? Let’s find the answers to these questions in this review –
|
Table of Contents |
What is Linear Finance?
Linear Finance is the cross-chain compatible, non-custodial DeFi protocol that creates, trades & manages synthetic assets. Built on Ethereum, Linear has a long term vision to provide a platform for users to gain exposure to a range of crypto assets without slippage and settlement fee.
It will allow users to build and manage portfolios with its range of financial products, utilizing the power of synthetic assets. Users need ℓUSD to purchase synthetic assets on the Linear platform. More details on the operation part will be shared later in the post.
A look into Linear Products:
Linear Buildr:
Linear Buildr is a decentralized application for collateral pool and Liquids management. It accepts a mixture of LINA tokens and other digital assets as collateral. Users can stake LINA tokens and earn staking rewards. The collateralized LINA tokens are used to build ℓUSD which can be further used to trade on its exchange.
Buildr can be used both by retail users and market makers in the following ways –
Users need to stake LINA to get ℓUSD for trading on the Linear exchange
Linear Exchange:
Linear exchanges enable the trading of a wide range of assets. It is not limited to trading cryptocurrency but also includes traditional assets like forex, commodities, market indices and equities. Unlike traditional exchange which requires a longer settlement time (T+2) for trading equities or commodities.
Linear exchange lowers the settlement timeframe with block time as low as in seconds guaranteeing instant finality. Moreover, it will allow users to manage their exposure to the market
Linear Finance has upgraded to Chainlink Oracle for a reliable price feed.
Linear Swap:
Linear swap is a cross-chain swap protocol built for swapping and maintaining connectivity across other DeFi protocols. It allows users to swap Liquids, LINA or ℓUSD across different blockchains at the lowest cost possible.
Linear Vault:
Call it a passive income generating machine. Users need to lock ℓUSD or LP tokens to earn interest paid on their deposit in ℓUSD, BUSD and LINA tokens.
Linear Debt Terminator:
The Debt Terminator is a new Linear Dapp introduced in Aug 2022. It will help protect the protocol & is immune to any market conditions. More details on the Terminator are shared in the tweet –
🚨New #dApp!
— Linear Finance (@LinearFinance) August 12, 2022
Introducing: Linear Debt Terminator 👀
💪#LinearFinance users can now use the new GUI to liquidate accounts whose p-ratio has fallen below 200%
🦺Safeguard the protocol and its resistance to volatile market conditions
Full details👇https://t.co/bR0rVtCxNM$LINA pic.twitter.com/xikG4UDVMn
How to use Linear as a Beginner?
Let me explain Linear in a Layman term. Linear is fueled by LINA token and it exposes users to a range of assets on a single platform. The asset class includes cryptocurrency, commodities, equities, forex and indices.
Users need to purchase and stake LINA on Linear Buildr to receive ℓUSD and staking rewards. Remember LINA is staked with a mix of other digital assets like BTC/LINA, ETH/LINA etc as collateral. ℓUSD is used to purchase or trade synthetic assets on the Linear exchange at the lowest fee possible. With time, Linear will be adding equities (stocks) like Mirror Protocol and provide a range of blue-chip stocks to trade.
Moreover, ℓUSD or LP Tokens can be locked in the vault to earn passive income with up to 15% APY.
ℓUSD is Linear stablecoin & Liquids is a term used for synthetic assets
What is Linear Token LINA?
LINA is the native ERC-20 token of Linear Finance. It is the backbone of the complete ecosystem, it helps to provide unlimited liquidity to Linear liquidity pools. The token serves the following utilities-
- Governance
- Base Collateral
- Staking rewards
Governance:
LINA is a governance token that enables token holders to vote on key proposals related to distribution models, assets to be listed on the exchange, oracle selection etc. LINA holders within the debt pool will receive pro-rata fees from the building of Liquids.
Base Collateral:
LINA tokens are base collateral to create Liquids using Buildr. The creation of Liquids further requires a pledge ratio of over 100% (default to 500%) to protect the ecosystem from the extreme volatility of the deposited assets.
Refer to the Linear post to understand the meaning of the pledge ratio and how the debt pool work.
Staking Rewards:
LINA stakers receive incentives in the following ways –
– Pro-Rata Exchange Fee:
The platform charges a small amount of transaction fee for every transaction on the Linear Exchange. LINA Stakers will receive a portion of the fee as reward (in ℓUSD) on a weekly basis if their Pledge ratio is above the minimum threshold.
– Inflation Reward:
Linear follows inflationary tokenomics with a decreasing rate until the terminal floor is reached. Currently, it is set to 60% (for staked token) and the rewards are distributed on weekly basis.
The reward includes Yield Farming and is dependent upon the pledge ratio. Checkout the Whitepaper & read further details on staking rewards.
The total supply of LINA token is capped at 10 billion
Linear Finance IEO:
LINA announced its IEO on March 18, 2021, on Binance Launchpad. The token was offered at a discount price of $0.08. Refer to the table for complete details –
Linear Finance Benefits:
Cross-Chain Compatible:
Linear is working towards becoming a cross-chain compatible protocol that provides a seamless trading experience on its exchange using synthetic assets across multiple blockchains.
Linear DAO:
Linear will soon introduce community-driven DAO which will govern the whole ecosystem of Linear Finance. It will on the following parameters –
Multi-Asset Exposure:
Linear is one of the few blockchain projects that aim to provide multi-asset exposure to users. From trading cryptocurrency to commodities, it has a range of assets to offer to retail users and Market Makers. It’s only a matter of time for Linear to launch more tradable assets on its exchange and it may also offer portfolio management services like NOVA Finance.
Linear Finance Drawbacks:
Slower Pace:
Despite offering a range of assets for trading, it only has 19 pairs of synthetic assets of which 14 are crypto pairs. In short, the platform isn’t growing at a faster pace when compared to its competitor i.e Mirror Finance which has 30+ synthetic assets trading on its platform at the time of writing this post.
Not for Mainstream users:
The platform is complex for mainstream users who have little knowledge about cryptocurrency. The process of buying LINA and then staking it to receive ℓUSD for trading isn’t easy for these users who wish to use the platform. This may slow down the growth of the platform.
Linear Token Price:
Please check the latest price of Linear Token –
Linear Coin Price Prediction:
Launched in 2021, LINA failed to impress the token holders. The price reached an all-time high of around $0.20 and later fell back to $0.01 per token. The token fell victim to the 2022 bear market and failed to recover ever since.
At the time of writing, the token is stabilized around $0.010. Overall, the token is less volatile and shows no signs of recovery. On the bright side, LINA has the tendency to recover and may end up hitting $0.15 -$0.20 in the bull run.
Where to buy LINA Coin?
LINA can be bought from leading exchanges like Binance, HitBTC and AAX.
Is Linear Finance a Good Investment?
Linear is safe but it won’t be a high ROI investment, at least in the short term. The project fundamentals are strong but it is developing at a slow pace. The token is less volatile and shows no signs of recovery in the current market condition.
Overall, the exchange is limited to just 19 assets which limit the growth of its ecosystem. The team is working on a lot of features like LinearDAO but it will take some time to develop. If you believe in the potential of synthetic assets – Linear, NOVA Finance & Mirror Protocol should be on your watchlist.
This completes my review of Linear Finance. In the next post, I will talk about Dego Finance & SafePal wallet. If you’re a fan of blockchain technology then do share this post on your social handles and educate everyone around you. Remember to subscribe to my YouTube channel for more informative content, released every week.
DISCLAIMER:
Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.
[post_grid id=”6111″]
Paras is a blockchain writer & video creator at Katoch Tubes. In his free time, he loves watching space exploration documentaries & Hollywood movies.