1/ A new undercollateralized loans protocol, @dammfinance, has just launched and their improved version of liquidity mining called "liquidity bonding" is about to begin.
Here's everything you need to know about @dammfinance and how to participate in liquidity bonding π§΅π
Here's everything you need to know about @dammfinance and how to participate in liquidity bonding π§΅π
2/ The thread is separated into the following parts:
π¦| Borrowing/lending landscape
β| What is dAMM?
π€| Token suppliers, token borrowers and token issuers
π§| Liquidity Bonding
π| dAMM token utility
π¦| Borrowing/lending landscape
β| What is dAMM?
π€| Token suppliers, token borrowers and token issuers
π§| Liquidity Bonding
π| dAMM token utility
3/ π¦| Borrowing/lending landscape
The current crypto borrowing and lending landscape is capital intensive for market makers. This is because borrowers must take overcollateralized loans - a form of lending that hinders capital efficiency and has greater liquidation risk.
The current crypto borrowing and lending landscape is capital intensive for market makers. This is because borrowers must take overcollateralized loans - a form of lending that hinders capital efficiency and has greater liquidation risk.
4/ Moreover, lower cap tokens aren't borrowable on existing platforms such as Compound, Aave, Maple and Truefi. Rari and Euler have created permissionless isolated lending markets to enable borrowing of lower cap tokens but the loans are still overcollateralized.
5/ β| What is dAMM?
@dammfinance was created to solve these problems while providing a cost-effective way for market makers to source capital for CEXs and DEXs.
Their platform offers secure under-collateralized lending for market makers with significant on-chain credit history
@dammfinance was created to solve these problems while providing a cost-effective way for market makers to source capital for CEXs and DEXs.
Their platform offers secure under-collateralized lending for market makers with significant on-chain credit history
6/ They'll allow undercollateralized loans of any token! FYI Maple only supports lending of 2 - 3 coins whereas @dammfinance has 23 borrowable tokens from the get-go and plans on scaling that number up to 200.
A few tokens out of the 23: $FRAX, $CRV, $CVX, $FXS, $WOO, $BTRFLY
A few tokens out of the 23: $FRAX, $CRV, $CVX, $FXS, $WOO, $BTRFLY
7/ π€| Token supplier vs token borrowers
You can be a token supplier or token borrower on the dAMM platform. Most of us will be token suppliers since we're poor and don't have good credit.
Token suppliers deposit tokens into the pools to be borrowed by token borrowers.
You can be a token supplier or token borrower on the dAMM platform. Most of us will be token suppliers since we're poor and don't have good credit.
Token suppliers deposit tokens into the pools to be borrowed by token borrowers.
8/ What does this accomplish?
π₯| Token suppliers:
- Premium yields on deposits
π€²| Token borrowers:
- Trading operations that improve token liquidity. Liquidity is lacking for alt-coins since market makers are not able to borrow these tokens. dAMM fixes this π»βοΈ
π₯| Token suppliers:
- Premium yields on deposits
π€²| Token borrowers:
- Trading operations that improve token liquidity. Liquidity is lacking for alt-coins since market makers are not able to borrow these tokens. dAMM fixes this π»βοΈ
9/ Who are the borrowers and is it safu for lenders?
dAMM caters to market-neutral trading firms. These borrowers will provide full on and off-chain transparency for their lenders by integrating Credora, a third-party credit risk analysis platform.
dAMM caters to market-neutral trading firms. These borrowers will provide full on and off-chain transparency for their lenders by integrating Credora, a third-party credit risk analysis platform.
10/ This will allow lenders to monitor and track borrower activity at all times. Do not fret, the dAMM team is well aware of the risks and has measures in place to ensure lenders' funds are safe. More on this below...
11/
1. Borrowers enter into a master loan agreement to ensure legal enforceability.
2. Thorough credit analysis and review of borrowerβs financial statements.
3. Borrow limits in place (Fixed % of borrower's balance sheet OR 5x the value of the borrower's staked dAMM.
1. Borrowers enter into a master loan agreement to ensure legal enforceability.
2. Thorough credit analysis and review of borrowerβs financial statements.
3. Borrow limits in place (Fixed % of borrower's balance sheet OR 5x the value of the borrower's staked dAMM.
12/ Some of the market makers that they will be onboarding:
- @wintermute_t
- @ResearchKronos
- Time Research
- @Sysnine
- @ledger_prime
- @WOOnetwork
- @wintermute_t
- @ResearchKronos
- Time Research
- @Sysnine
- @ledger_prime
- @WOOnetwork
13/ π§| Liquidity Bonding
Liquidity bonding is a token distribution mechanism that dAMM is pioneering. Instead of earning dAMM tokens up front, you earn bonds (bdAMM) that give you the right to mint dAMM tokens at a discount relative to the current market price.
Liquidity bonding is a token distribution mechanism that dAMM is pioneering. Instead of earning dAMM tokens up front, you earn bonds (bdAMM) that give you the right to mint dAMM tokens at a discount relative to the current market price.
14/ The main advantage of Liquidity bonding is it creates protocol-controlled value (PCV). 25% of liquidity bonding revenue is staked in an insurance vault and 75% is re-deposited back into the protocol. This creates a flywheel as shown below.
15/ Things you should know before liquidity bonding starts:
- Live on ETH (multichain soon)
- No deposit/withdrawal fees
- bdAMM can be redeemed starting October 31st. All bonding redemptions are FREE for 24 hours
- The dAMM discount rate linearly decreases over the first year
- Live on ETH (multichain soon)
- No deposit/withdrawal fees
- bdAMM can be redeemed starting October 31st. All bonding redemptions are FREE for 24 hours
- The dAMM discount rate linearly decreases over the first year
16/ Additional Incentives
- Borrowers also receive bdAMM proportional to their loan size.
- Token issuers or CEXs can add additional incentives. Eg. Binance lists $BTRFLY but is seeking additional liquidity and adds a $50k incentive to $BTRFLY borrowers & lenders
- Borrowers also receive bdAMM proportional to their loan size.
- Token issuers or CEXs can add additional incentives. Eg. Binance lists $BTRFLY but is seeking additional liquidity and adds a $50k incentive to $BTRFLY borrowers & lenders
17/ π| Lastly, dAMM token utility:
The moment you've been waiting for... Besides being used for governance, dAMM stakers have a claim to 10% of protocol revenue paid out in stablecoins! Yup real yield.
The moment you've been waiting for... Besides being used for governance, dAMM stakers have a claim to 10% of protocol revenue paid out in stablecoins! Yup real yield.
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