Project description

Folks Finance is preparing for its launch by performing all the necessary reviews, audits, and soon, the testnet. Runtime Verification Inc and two more professional auditors have been engaged to conduct the protocol security audit. The team will soon announce more details regarding the results of the audits.

On the economic side, Folks Finance is collaborating with cryptecon's industry specialists to conduct analysis, research, and simulations of the various economic parameters. In particular, the safety margins S1, S2, S3, the optimal Utilization Ratio, and the overall soundness of the economic model have been reviewed and analyzed.

The collaboration will result in the publication of several collaborative research papers and a long-term partnership to ensure the best possible work on future protocol developments and updates. Anticipating the official publications, here are some highlights of the research work carried out by the companies:

• Folks Finance safety parameters are being set based on crypto pairs assumptions.  In agreement with cryptecon, Folks Finance has concluded that it is safer to define the parameters S1, S2 and S3 based on pairs of tokens evaluating their market covariance, rather than only on the borrowed asset, as it is typically done in traditional lending protocols.
• The start-up of the new liquidity pools is a critical point of Lending protocols. The team has implemented an innovative liquidity provision and incentive system. This was reviewed by the Swiss company to ensure protocol stability and limit the rise of critical liquidity situations. Moreover, Folks Finance will require specific conditions for whitelisting a new asset.
• In order to test the protocol, cryptecon created a simulator (agent-based model) that reproduces the calculations of the protocol and simulates the actions of different agents. The simulator allows us to study the model’s behaviour during its regular use.

Folks Finance CEO Benedetto Biondi said:

"We are very pleased and excited to have partnered with cryptecon, one of the most established realities on economic consulting in crypto. Thanks to the collaboration and the continuous dedication, we have been able to improve the protocol making it more functional, reliable, and secure. During these months of work, we have had a lot of positive feedback, which has given rise to a long-term collaboration with the Swiss company, thanks to which we will be able to continue to have their support and know-how to ensure maximum performance in the future developments of Folks Finance".

Matthias Hafner, Director of the Center for Cryptoeconomics said:

“We are delighted to announce the recently established partnership with Folks Finance. Previously, cryptecon has created an agent-based model for Folks Finance to simulate the behaviour of their protocol under different scenarios. It has always been a great pleasure to work with them, so we decided to extend it. This collaboration allows us to discuss and solve problems in-depth and find optimal protocol solutions. With the created simulation and the knowledge of both partners, we are confident to create a secure and profitable lending platform and thus contribute to the Algorand ecosystem.”

Methods

• Numerical simulation
• Agent-based modelling