Folks Finance Liquid Governance Guide

Learn how to use Liquid Governance and upgrade your Governance game

Yo, gov!

The Club has moved to our own custom website: www.governorsclub.xyz. 

Even though we've moved, our content and dedication to being the definitive source to upgrade your Algorand DeFi and NFT game remain unchanged!

We'll keep this substack accessible for a short period of time, but we encourage you to update your bookmarks and links to our new domain as soon as possible to continue your Algorand journey.

Thank you for your continued support, and we look forward to seeing you at the new and improved Club!

Gov Tip: If you’re new to Algorand, make sure to check out our Algorand Beginners Guide to begin your Algorand journey!

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What is Folks Finance?

Put simply, Folks Finance is a crypto lending market that allows users to lend and borrow ALGO, ASAs, and stablecoins through a user-friendly UI. However, it has a unique incentive system that rewards good actors when they repay their loan or provide liquidity through the Lock & Earn feature. 

Users who perform either action will receive rewards tokens called frTokens (i.e. frALGOs) that they can trade back to the protocol for additional ALGO rewards, and for the next few months the protocol will be distributing an additional 2MM ALGOs from the Aeneas rewards program in addition to frTokens.

Gov Tip: Lock & Earn is a feature on Folks Finance in which users lock their assets for a fixed period of time (i.e. 2 months) to receive a higher APR. Learn more here.

Folks Finance has two more unique features: the Rewards Aggregator and Liquid Governance. The Rewards Aggregator is the redemption mechanism for frTokens in which users can choose to redeem their frTokens instantly or vest them for extra time to earn more rewards. 

Gov Tip: You can learn more about the Rewards Aggregator and frTokens here.

And Liquid Governance? Keep on reading to learn how this feature is a game-changer for our ecosystem. 

Liquid Governance Overview

With Liquid Governance, Folks Finance has introduced the first ALGO liquid staking Governance program. Governors who commit their ALGOs to Governance through Folks Finance will receive a new asset named “gALGO” – which is pegged to the value of ALGO – in a 1:1 ratio. gALGO can be deposited, leveraged as collateral, or taken off the platform to participate in other DeFi protocols.

Naturally, this feature is inherently similar to both Algofi’s Vault and the GARD Protocol as it serves a similar function; however, unlike both of those gALGO doesn’t require users to take a collateralized position against their Governance stake. With that being said, you can only unlock gALGO’s liquidity by using it as collateral at this time.

Gov Tip: Official gALGO partnerships have yet to be announced; however, xBacked and PactFi have heavily hinted at incorporating gALGO into their protocols. Users will likely be able to use gALGO as collateral on xBacked to mint xUSD and provide liquidity in pools on PactFi.

For Governance Period #3, user voting won’t be incorporated into Liquid Governance. For this upcoming period, users will delegate their vote to Folks Finance who will assign all votes to the Foundation’s recommended option. In the future, users will have autonomy over their own vote similar to Algofi’s Vault & GARD.

At the end of the Governance period, governors will burn their gALGO to redeem their committed ALGO and Governance rewards. Folks Finance will take a 5% fee from the rewards accrued for providing this service.