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Fuji DAO, the protocol for borrowing cryptocurrencies at the best rate

by Thomas

Decentralised finance (DeFi) is a heavyweight in the cryptocurrency ecosystem today. Various protocols allow for optimized and automated interest generation, but none allow for this for borrowing. Learn more about Fuji DAO, the first crypto asset borrowing optimization platform.

Fuji DAO, a project that meets a demand

As we know, many projects are regularly emerging in decentralised finance (DeFi). Among them, some protocol aggregators that allow to maximise the benefits of users who want to lend their assets. To do this, these platforms automatically look for the best interest rates on the different protocols to maximise profitability.

However, borrowers could not take advantage of a similar tool to minimise their borrowing costs automatically. At least not until Fuji DAO came along.

This idea was born when the founders met in January 2021. This project that was just an idea during ETHGlobal’s “Marketmake” hackathon has developed into what it is today.

Fuji DAO logo

Fuji DAO logo

Borrowers facing challenges

Users of borrowing platforms face various problems. First, volatility is a major difficulty for borrowers. This is because they experience constant changes in interest rates due to supply and demand. Thus, a loan taken out with a low interest rate may surprise the user when the interest rate suddenly increases and thus leads to higher charges.

This brings us to the second issue: time. Since changing interest rates on a loan are common in the DeFi world, users need to be careful not to get trapped. This debt management is time consuming and incurs more fees due to transaction costs, especially on the Ethereum blockchain (ETH).

Reasons to use the platform

The Fuji DAO protocol was built to make life easier for borrowers. It constantly monitors the borrowing market, and automatically refinances the debt pool at the best rate.

Using Fuji DAO rather than a basic protocol has many advantages:

  • Cost optimisation reduces borrowers’ interest;
  • Economy of scale of borrowing pools reduces transaction costs by sharing fixed costs;
  • The absence of the need to search for the best interest rate saves time for the user;
  • The application makes it easy to manage debts on a single platform.

How the Fuji DAO protocol works

The Fuji DAO platform will create a vault where the user deposits an asset in exchange for another asset. For example, in the ETH/DAI vault, the borrower will deposit an amount of ETH as collateral and receive an amount of DAI.

When a loan is contracted from a Fuji vault, the necessary liquidity will be sourced directly from a base protocol at the best rate. Among them, we can find the Compound, Aave or IronBank protocols. Other protocols and blockchains will be added in the future, with for example, a recent collaboration with the Fantom blockchain (FTM) which adds 3 liquidity providers (Geist, Scream and IronBank) as well as 3 new vaults (FTM/DAI, FTM/USDC, BTC/DAI).

New vaults available with the Fantom blockchain

New vaults available with the Fantom blockchain


The Fuji protocol will track the individual user’s position and ensure the health of the vault via traditional liquidation mechanisms. In order to avoid liquidation, a borrower must keep the proportion of debt at the security deposit he or she has provided at a certain threshold.

When the market fluctuates and a liquidity provider has a lower interest rate for an asset, the Fuji protocol automatically triggers a balancing operation and refinances the entire vault position. This means that users instantly have a better interest rate on their loan without having to take any action.

Tutorial – How to use Fuji DAO

Firstly, you need to go to the Fuji DAO website and click on the “App” button to go to the application.


Once the application is open, you can connect a portfolio of assets from among those available to you.

Once logged in, you have access to the dashboard which allows you to choose the blockchain on which you wish to borrow cryptocurrencies. At the time of writing, you can choose between the Ethereum blockchain and Fantom.

Borrowing from Fuji DAO

Once you have selected your blockchain, borrowing is very simple.

Go to the “Borrow” window, where you can choose the asset you want to borrow, the amount of the asset, and the amount of the security deposit


After that, you can get an overview of the “Health Factor” which offers an overview of the risk of the loan according to your security deposit. Be aware that this must remain above 1, and that it varies according to the value of the assets deposited. If it falls below this threshold, your deposited tokens will be liquidated.

Also note that you can access the different interest rates in the ‘Markets’ window on the left hand side of the page

Manage your loans

Once you have taken out a loan, you can keep track of it and your future loans by going to the ‘My Positions’ page.

From here you can manage your various loans and monitor their health factor, or pay off your loans.

Conclusion

Fuji DAO is a platform that allows borrowers to minimise the cost of borrowing and makes it easier to manage. Its accessibility facilitates borrowing in decentralised finance, and saves time for its users.

This project is a pioneer in its field, and will help democratise borrowing in the cryptocurrency world.

The future of the project seems to be set, as the future addition of new platforms and blockchains could improve the diversity of Fuji DAO’s offering as well as its attractiveness.

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