Thomas Daniels
Polygon has awarded a $300,000 grant to Folks Finance, a decentralized lending protocol, to enhance cross-chain lending capabilities on its Proof-of-Stake (PoS) network. This strategic funding move aims to address the persistent issue of liquidity fragmentation in decentralized finance (DeFi), enabling more seamless borrowing and lending across different blockchain networks.
Distributed in three tranches, the grant comes at a pivotal time. With Aave scaling back its operations on Polygon PoS, a significant vacuum has emerged in the ecosystem’s lending markets. The first tranche, amounting to $100,000 in POL tokens, is already live.
Folks Finance introduces a “hub-and-spoke” model that consolidates liquidity into a central hub. This approach allows users to deposit collateral on one blockchain and borrow from another without relying on conventional bridging infrastructure. Instead, the protocol uses secure messaging layers — including Circle’s Cross-Chain Transfer Protocol (CCTP), Chainlink’s Cross-Chain Interoperability Protocol (CCIP), and Wormhole — to transmit signed instructions, ensuring assets remain native to their originating chains.
This streamlined system enhances user experience while mitigating the risks associated with synthetic assets and unsecured bridges. For example, users can supply USDC on Arbitrum, see the deposit reflected on Polygon, and then initiate a wETH loan on Avalanche without interacting with a bridge. Participants are also incentivized through “Folks Points,” a loyalty system that tracks and rewards user engagement.
Commenting on the initiative, Folks Finance CEO Benedetto Biondi said the grant underscores a strategic alignment with Polygon, expressing enthusiasm for deepening collaboration within the ecosystem. Polygon Labs CEO Marc Borion highlighted the evolving landscape on Polygon PoS and welcomed new players poised to shape the next phase of Web3 lending.
Beyond Polygon’s support, Folks Finance has also secured grants from the Avalanche and Arbitrum Foundations, reflecting growing multi-ecosystem confidence in the protocol’s cross-chain vision.
With broad industry backing, Folks Finance is positioned to catalyze innovation in DeFi lending, offering users improved access to unified liquidity across blockchain networks.
