Introducing Lien Protocol – ETH-Denominated Options & Stablecoins

https://defirate.com/lien-protocol-idol/

Special thanks to Kirby Ong for the guest post! 

Maker – the leading DeFi lending protocol behind Dai – has a new competior, Lien Protocol. Lien will be conducting an Initial FairSwap Listing for LIEN on 7th September at 13:00 UTC using an iDOL/LIEN trading pair in lieu of its mainnet launch this past week.

 

What is Lien Protocol?

Lien Protocol is a decentralized, governance-less, censorship-resistant protocol for creating options and stablecoins with ETH.

With Lien Protocol, users can mint a crypto-backed stablecoin called the independent dollar (iDOL) without the need for over-collateralization. There is no requirement for users to deposit excess collateral as Lien Protocol facilitates two types of derivatives; the Solid Bond Token (SBT), and the Liquid Bond Token (LBT), from ETH.

Credits to Kerman Kohli

The Solid Bond Token (SBT) aims to have a stable value, whereas Liquid Bond Tokens (LBT) behaves like a call option as the amount of ETH the LBT holder receives increases as the price of ETH increases. With this separation of ETH into SBT (stable-valued token) and LBT (call option token), Lien Protocol completely removes the need for over-collateralization.

Lien Token (LIEN)

The Lien Token (LIEN) is a utility token used to receive discounts on protocol fees. These discounts are the fees that are collected in ETH/iDOL when users mint iDOL, and when users exchange assets on FairSwap. All protocol fees are distributed to LIEN holders as rebates at the end of each month.

Independent Dollar (iDOL)

iDOL is an ERC20 stablecoin backed by ETH derivatives (SBTs and LBTs). It does not use centralized collateral and stabilizes its price through market mechanisms that act on arbitrage opportunities. There is no governance in the Lien Protocol, ensuring that iDOL tokens are censorship-resistant.  Users deposit ETH and get a 1:1 representation of ETH in the form of iDOL.

Fairswap

Fairswap is a Uniswap-inspired DEX that aims to provide users with “fair” trades using several new mechanisms. A guide on how Lien works can be found here.

 

 

Front-running Mitigation

Fairswap prevents front-running by using frequent batch auctions. This means that trades are not processed according to their “queue” number, as this would open up opportunities for arbitrageurs to front-run orders to the disadvantage of users like you and me. With FairSwap, orders are batched in two neighbouring blocks which are cleared simultaneously, ensuring orders get the same, “fair” price.

Dynamic Fee Pricing

Trading fees on FairSwap automatically adjust based on estimated annualized volatility and the strike price of LBT. With this Dynamic Fee Pricing system, LPs are compensated for excess impermanent loss resulting from the volatility of LBTs.

Closing Thoughts

In summary, Lien offers a novel approach to permissionless stablecoin issuance set to rival DAI. Alongside competitors like MetaCoin, September is shaping up to be an exciting month for censorship-resistant stablecoins which have historically had a very tough time maintaining their peg.

To stay up with Lien, follow the project on Twitter or join the conversation on Discord.

The post Introducing Lien Protocol – ETH-Denominated Options & Stablecoins appeared first on DeFi Rate.

mStable Unveils MTA Yield Farming for mUSD Balancer Liquidity

https://defirate.com/mta-yield-farming/

mStable – a rising stablecoin aggregator – has unveiled their plans for their MTA governance token distribution starting with mUSD liquidity incentives.

With a focus on making stablecoins easy, safe and profitable, mStable aggregates leading stablecoins to collateralize a native token mUSD. Now, while there’s a lot of different stablecoins being touted here, what you need to know is that mStable addresses the following:

  • Fragmentation in same-peg assets
  • Lack of native yield as demand spikes
  • Protection against permanent capital loss

With mStable, users can trade between top stablecoins like DAI and USDC with minimal slippage while also collateralizing mUSD. The protocol is designed in such a way that should one stablecoin shit the bed, the rest of the pool (and those providing capital to it) do not go down with the ship. Now, with the recent surge around stablecoin volume thanks to the yield farming saga, mStable APY’s have skyrocketed in just under a month since launch.

Introducing MTA

As if double-digit APYs on a stable asset wasn’t enough to get you excited, today’s release of the Meta protocol token – MTA – is sure to do the trick. As a native governance token, MTA will be used to influence parameters like supported assets, protocol fees, and swap rates thanks to key actors called Meta Governers. In addition to the typical governance spiel, MTA also acts as a line of defense against capital loss. In exchange for these services, MTA stakers earn protocol fees.

The distribution of MTA will be skewed in favor of those providing asset liquidity and utility as follows:

Today – this distribution begins through the introduction of MTA liquidity mining.

MTA Ecosystem Rewards

Those who contribute liquidity to the mUSD/USDC Balancer pool will be eligible to share a monthly distribution of 200,000 MTA for the first month. Now, less than 24 hours after launch the pool has nearly $3M worth of liquidity.

The neat thing about the MTA reward model is that the size of the monthly allocation is set to change with time. Similarly, the issuance of these rewards will happen randomly with onchain snapshots as to encourage liquidity honesty.

This varying model of MTA rewards should better align incentives as the protocol continues to grow, just as we’ve seen with COMP and BAL spiking the AUM for the leading DeFi primitives. On top of MTA issuance, LPs also benefit from BAL rewards and protocol fees from mStable volume.

Please note that MTA has yet to be minted and that rewards are set to be locked until the staking contract is created at some point in the next three months.

Curve v mStable

In DeFi farming circles, the competition regarding where to deploy your capital has become more and more intense. As Curve, mStable, and Ampleforth all roll out various forms of stablcoins incentives, the liquidity wars are only set to get more and more intense.

If one thing is for certain, the fact that mStable is taking a strong stance on purely stablecoins may be one key differentiator from something like Curve which has recenly expanding to a wider range of assets with the introduction of their BTC pools.

If nothing else, DeFi yield farmers have never had more of a prime opportunity to harvest the season’s most bountiful crops. While many are rushing to Curve in preparation for the upcoming CRV distribution, we’d like to say anyone reading this article now has a glimpse into the latest plantation which has yet to be saturated with first-timers.

To stay up with mStable, follow them on Twitter or join the conversation on Discord.

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dYdX Adds USDT Support Using Curve for Bitcoin Perpetual Futures

https://defirate.com/dydx-curve-usdt/

dYdX – an industry-leading derivatives DEX – has added support for USDT in their highly acclaimed permissionless Bitcoin Perpetual Futures.

For those who missed it, dYdX has seen unprecedented growth in recent months with the introduction of BTCUSDC perpetual futures – allowing users to go long or short on Bitcoin with up to 10x leverage in an entirely permissionless fashion. To learn more about how to use this feature, check out our tutorial here.

Today, dYdX partnered with Curve Finance to integrate the industry-leading stablecoin Tether (USDT) and it’s nearly $8B market cap as a means of fueling exponentially more volume into their perpetual orderbooks.

What’s To Know?

With this new feature, users can now deposit USDT to access the BTC-USDC trading pair. Under the hood, dYdX leverages Curve’s low-slippage liquidity pools to seamlessly convert USDT to USDC without any additional interactions by the user. Once the account is loaded, users can trade Bitcoin with up to 10x margin while earning interest on their holdings as a part of dYdX’s cross-margin lending feature.

The integration of USDT marks the first step towards a diverse pool of asset support – ultimately laying the foundation for any stablecoin to be used to access permissionless leverage on assets like Bitcoin.

Curve Surges

The integration of USDT comes in parallel with Curve recently breaking ATH’s in terms of 24H volume. For those who missed it, Curve became the DEX with the highest trading volume following the launch of COMP and the rush to farm native governance tokens using USDT.

Seeing as Curve is the best place to access USDT with low-slippage at minimal cost, many traders have rushed to the platform to get their hands on the stablecoin with the highest lending and borrowing rates across lending markets like Compound.

Outside of USDT, this partnership marks another promising partnership under Curve’s belt. With the recent integration of the RenVM and the launch of the WBTC Cafe, Curve is quickly evolving into an abstraction onramp to be able to offer diverse asset support with seamless user flow.

On top of all of this, Curve recently announced their plans to release their own native governance token – meaning liquidity is likely to continue to surge as yield farmers race to scoop up the next hottest governance token on the block.

dYdX Levels Up

On virtually all fronts, dYdX has long served as a shining example of a DeFi company with a clear path to profitability. As if added support for permissionless Bitcoin leverage wasn’t enough, this new addition of Tether is sure to give centralized counterparts like Binance and Bitmex a run for their money.

We recently released a guide on perpetual futures including descriptions on the design differences from the aforementioned centralized exchanges. The TLDR is that by using smart contracts and Maker oracles, dYdX can offer significantly faster price updates, making their futures some of (if not the) most efficient in the whole market.

If one thing is for sure, DeFi continues to shine in terms of composability. We expect this trend to be followed by many more projects and as it relates to dYdX – more perpetual asset integration is certainly on the horizon.

In the meantime, be sure to stay up on all things dYdX and Curve on Twitter.

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DeFiDollar Demo: HackMoney Interest-Earning Stablecoin Index

https://defirate.com/defidollar/

Following up on our coverage of ETHGlobal’s HackMoney Virtual DeFi Hackathon submissions comes an exciting new project called DeFiDollar – an index of stablecoins set to mitigate peg slippage through a suite on innovative DeFi products.

Built by the team at Matic, DeFiDollar aims to solve one of stablecoin’s biggest issues – maintaining the peg without overbearing collateralization ratios. While many have come to recognize Dai as the DeFi-leading stablecoin, many have voiced concerns with Dai’s ability to maintain it’s peg, largely due to the volatility of its underlying collateral. Here’s the DeFiDollar demo from HackMoney:

What’s To Know?

As an index asset, DeFiDollar leverages industry-leading stablecoins like DAI and TUSD to collateralize the creation of new DUSD. When stablecoins are deposited to the platform, they are automatically routed through Aave and turned into interest-earning aTokens. The aTokens are then sent to a Balancer pool, with the interest being earned on that collateral being redirected to an earnings pool.

By separating the interest from the underlying stablecoins, DeFiDollar can leverage Automated Market Makers like Uniswap and Curve for whenever people want to withdraw collateral or trade within the primary pool. With interest set aside, DUSD can effectively top different assets (triggered by Chainlink oracles) whenever they fall below the peg by sending capital back into the main collateral pool. Here’s a neat chart on how this all works.

DeFiDollar is currently live on testnet and can be accessed here. The product is still in its early day and currently only supports Dai, TUSD and MKR (not sure why MKR is supported). While there is still a long way to go before going live on mainnet, the design of the DUSD is certainly one which caught our attention.

DAI Competitors

In the past few weeks, we’ve seen a number of stablecoin projects look to take a crack at Dai. Citing Reflex Labs and RAI as an example, it seems like more and more projects are starting to take Dai’s design and peg slippage seriously. What’s interesting to note that this is a problem especially relevant to DeFi, mainly as other stablecoins like USDC have a much easier time maintaining their peg due to it’s trusted, fiat-backed nature.

With this in mind, the industry continues to search for a way to offer a trustless, permissionless stablecoin in a way that can mitigate volatility in the toughest conditions. While the design approaches we’ve seen differ, it’s tough to image a new stablecoin knocking off Dai as the DeFi standard in the immediate short term.

Especially now that we’ve seen WBTC give Maker another leg up, Dai is currently on track to break it’s ATH in supply in a matter of weeks. If nothing else, we applaud the DeFiDollar team for their design and are hopeful that they’ll push forward and keep iterating on the project in the coming months.

To learn more about the submission, check out the code here!

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