At Gondi, our core ethos is always user-first. Our mission is to ensure the most efficient and profitable experience for borrowers and lenders in the NFT credit market, while maximizing surface area for interactions between the participants.
There are several bottlenecks slowing down the wide-scale adoption of NFT credit markets – and gas fees is one of the most significant blockers.
Gondi is the most gas-efficient lending market to take out a loan from.
-
Fractional or tranched lender-borrower interactions (like partial refinancing on Gondi) will become non-viable if gas fees rise beyond a certain threshold. These features are critical to the evolution of the space.
-
Without conscious efforts to optimize it, gas fees could turn out to be a substantial tax on lender APRs and borrower margins. The ‘effective’ interest rate (interest rates on par with gas fees) is the one-metric-that-actually-matters for users.
How do we fare in comparison with our competition on this?
The effective cost of initiating a loan on Gondi is 40-60% lower when compared to other platforms.
To make the comparison, we followed the transaction records of a single Squiggle loan which was initiated on Gondi. We compared the gas costs to similar Squiggle loan initiation on 3 of the biggest NFT lending markets. For Gondi, the cost of loan initiation (in gas) came to 232315, while the other markets recorded numbers that were at least twice as big.
-
Protocol C — 1013359
-
Gondi — 232315
-
Protocol A — 526583
-
Protocol B — 685669
Gas efficiency is top consideration in every feature we release, and we have made changes to the initial protocol design to optimize it.
-
In most markets, when a loan is initiated, promissory notes are mandatorily issued as ERC-721 NFTs. On Gondi, that is not the case. People who wish to mint it can go ahead, but it is optional. This helps Gondi save on gas consumption.
-
We don’t save the full struct of the loans on-chain; only the hashes are synced.
Who pays the gas fees on Gondi?
The borrower initiates the loan, and they pay the gas fees on initiation.
When a loan is refinanced, the lender pays the bill.
No Promissory Notes
In most NFT credit markets, when a borrower accepts a loan offer, a ‘promissory note’ is minted in the form of an ERC-721 NFT. The lender holds the note, granting them the ability to take possession of the collateral if the borrower fails to repay.
Implementing this, however, would require trade-offs.
On the positive side, with the NFTs, loans would become tradeable; they could be rehypothecated, users could take a loan against the original loan etc.
On the other hand, gas fees would surge. And there is not a large enough secondary market for these instruments.
At Gondi, we decided to go with the user-first option of providing reduced gas fees for everyone. It is optional, and those who wish to leverage this feature can do so.
Only Hashes are Saved
Every time a loan is issued, a lot of data is generated – the details of the borrower, the lender, the principal, the NFT collateral, the duration of the loan etc. Syncing all of these details on-chain is very expensive. Gondi saves just the hash of that information, rather than the full struct of the loan. This helps us be a lot more gas-efficient.
A hash is a one-way function that provides fixed-length outputs to every single input. Two different inputs will not generate the same hash. If someone tries to repay, refinance or liquidate a loan, the protocol calculates the hash and verifies whether it matches up to what it has already saved.
Summary
-
Gas fees is 40-60% lower on Gondi, compared to other NFT credit markets.
-
We're not issuing NFTs as promissory notes, which helps cut down on gas costs.
-
Full structs of loans aren’t synced on-chain. We save only the hash of the loan information.
About Gondi
Gondi is a decentralized non-custodial NFT lending protocol engineered to create the most efficient NFT credit market.
Borrowing is cheaper for asset owners, while lenders enjoy higher capital utilization rates and improved returns. There are no automatic liquidations, and the platform enables continuous underwriting, refinancing, and renegotiation of loans.
READ MORE: All you need to know about Gondi
