The Goldfinch protocol token (GFI) just recently went live. And already it’s trading on the popular exchange Coinbase. News of this fresh token listing prompted investors to make a beeline for their accounts to add it to their wallets. Trading volume quickly surged. In a matter of hours, there were already several thousand Coinbase holders of GFI crypto. Despite this, its price quickly trended downward. Depending on your thoughts about microloans being introduced to the crypto-sphere, this either means it’s trading for a discount, or the Goldfinch Protocol token is headed for obscurity.
In order to help you decided whether this is a sound investment or not, we’ll be taking a closer look at GFI crypto and the protocol it acts as a governance token for.
While the token is brand new, the protocol it will help power is less so. As is its senior pool liquidity token, FIDU. Goldfinch launched in the beginning of last year. In doing so, its development team sought to introduce what it calls a missing piece to the world of crypto: loans without collateral. And it started by directing its efforts to those who could benefit most in emerging markets.
To date, the three countries with the most active loans through Goldfinch are Kenya, Nigeria and Uganda. But it has also found early success in Central and South America and Southeast Asia. In a matter of a year, Goldfinch has generated more than $38 million in active loans with more than 232,000 recipients. That averages out to around $163 per recipient. While that might not sound like a whole lot, it can make a world of difference to those in some developing countries. And that’s also an impressive amount of penetration for an innovative project this new.
How Goldfinch Protocol Is Looking to Make a Difference
The volume of crypto loans surged last year. It ballooned more than 1,900% year-over-year by some estimates. And that figure is expected to continue to increase. The problem here though is the collateral needed to take advantage of these types of programs. For every dollar-equivalent borrowed, roughly $1.50 of another asset needs to be collateralized. In many cases, this makes the crypto borrowing process unable to reach those who actually need it. But that’s exactly what the Goldfinch protocol is looking to fix.
Collateral requirements have stifled many aspects of what’s possible. Because after all, the reason many want to borrow is because they don’t have the money they need. Eliminating collateral requirements could be just the thing to help crypto’s foray into global debt markets. And the Goldfinch protocol may be the catalyst to make this happen.
Anyone that’s tried to take out a personal or business loan with a traditional bank know how expensive and difficult it can be. Furthermore, it’s expensive for banks to underwrite many of these loans. And this limits the viability of how lenders operate. In the process, those in emerging markets can have a difficult time securing loans for working capital, startup funding or paying for the equipment needed to expand. Because quite frankly, it isn’t worth a traditional bank’s time.
However, by removing banks’ overhead costs it’s possible to offer lending opportunities to people around the world. By offering lending opportunities based on the collective judgment of potential lenders around the world through the Goldfinch protocol, it’s now possible to recognize and evaluate new sources of credit opportunities. All of this leads us to how GFI crypto will play a role going forward.
GFI Crypto: How it Will Act as a Governance Token
Going forward, those who hold GFI crypto will be able to participate in governance and help decide the future direction of the Goldfinch protocol. Furthermore, holders can stake their GFI crypto on backers of their choice. This process will act as a signal of support for participating in borrower pools.
Additionally, GFI crypto holders will have a vote when deciding whether an individual or organization should be granted permission to borrow. This just requires holders to stake their tokens in order to be selected to participate in votes. While these aspects have already been incorporated into GFI crypto, additional functions are expected to be added in the coming months based on the direction the community wishes to take them.
As it stands, the current circulating supply of GFI crypto is just over 5 million tokens. And the max supply is 114,285,714. As it stands, this is not an inflationary token. However, modest inflation may be incorporated in the coming years if incentivization is needed to bring in more participation. But ultimately, that will be up to the community to decide.
The Bottom Line on the Goldfinch Protocol and the GFI Crypto Governance Token
While cryptocurrencies have made headway into the nonprofit world, altruistic projects like the Goldfinch protocol have yet to make a big splash. But that could change. And GFI crypto could be a way for investors to make a big difference in the lives of others around the world.
Centralized exchanges like Coinbase, Gate.io, MEXC and ZT have quickly added GFI to their platforms. In some ways this validates the mission behind the Goldfinch protocol. But whether it can keep up the momentum in interest and trading volume is a big question mark. Furthermore, based on the early successes of Goldfinch and its governance token, we’re likely to see copycat projects. And as we know, the first to market with a new innovation doesn’t always win.
However, we’re cautiously optimistic about the Goldfinch protocol and in turn, GFI crypto. The opportunities it has the potential to afford could be huge. And for that reason, we hope it does gain more traction in the crypto community.
Traditional microfinance operations provided more than $120 billion in lending opportunities to those in need. These small loans were used to provide working capital in nearly every corner of the globe. They helped stimulate the operations of more than 70 million minority- and women-owned business around the world. That in of itself is an amazing feel-good story. And it’s nice to see the world of DeFi has begun to add its voice to this important conversation.
About Matthew Makowski
Matthew Makowski is a senior research analyst and writer at DailyBusiness. He has been studying and writing about the markets for 20 years. Equally comfortable identifying value stocks as he is discounts in the crypto markets, Matthew began mining Bitcoin in 2011 and has since honed his focus on the cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dog, Dorito.