Everything you need to know about Defrost Finance’s near future
Dear Defrosters,
Thank you very much for your support, we view our launch as a great success. Only a week after the protocols were activated, the total value locked is almost 70 Million USD, with several collaterals available for minting H2O and an active market for MELT.
It is a great achievement for a protocol that was just born.
However, we see this as nothing but a stepping stone toward greater adoption and growth. And with this post, we would like to shed some light on the way forward.
Meet the Super Vault
Defrost Finance is accepting yield-bearing liquidity tokens as collateral for minting H2O. Once this is done, users can then provide H2O liquidity to gain additional yields, while still preserving the original yield from the LP tokens.
However, the current H2O minting contract only allows for reserving the native yields embedded in the LP tokens, like the interest in Qi tokens and the transaction fees in Curve LPs. It cannot claim and distribute the mining rewards on behalf of the users, such as QI rewards in Benqi and CRV rewards in Curve.
To further enhance the yield for users while maintaining our security, Defrost Finance is working on a next-generation vault called the “Super Vault”. This will allow users to enjoy further rewards from three sources:
- Embedded rewards in the LP tokens, like interest or transaction fees
- Mining rewards distributed by the interoperated projects
- MELT rewards for minting H2O and providing liquidity on Curve
For example, if you are lending USDC on Benqi, qiUSDC will automatically accrue interest in USDC and earn rewards in QI. By providing qiUSDC in the Super Vault, you will be able to reserve all of the rewards on Benqi, while still enjoying the additional MELT rewards by minting H2O and providing liquidity.
This will be a great leap ahead in terms of the DeFi integration model and enhance the yields for Defrost users.
Furthermore, please allow us to say that Defrost Finance is proud to be the first one applying this unique model. Not only will it strengthen the yields for users and increase the TVL in the protocol itself, but it will also create additional protocol revenue to be distributed to the MELT stakers.
New Sources of Cross-chained Liquidity
As introduced in our roadmap, cross-chained assets will be whitelisted for minting H2O. Defrost Finance will be the first platform in DeFi to apply this model to a stablecoin.
Among our great partners is Wanlabs, a DeFi incubator powered by Wanchain. Wanchain is one of the first and best-known platforms specialized in decentralized cross-chain bridges, meaning Wanlabs will provide the professional decentralized cross-chain technology to Defrost Finance for bridging the LP tokens from other chains to Avalanche. Among them will be the likes of ETH, BSC, Polkadot, and more.
Defrost Finance will start to whitelist cross-chained assets from Ethereum, including from Uniswap V2, Pancakeswap and other lending protocols. The inclusion of LP assets from other chains will further diversify the risks associated with generating H2O and bring additional DeFi applications to the Avalanche ecosystem.
A New MELT Staking Pool
Another feature that will be online soon is our MELT staking pool, where stakers can simultaneously earn MELT and H2O from protocol fees. As introduced in our docs, 50% of the protocol fees in H2O — collected from the stability fee and liquidation penalty — will be distributed to MELT stakers. This new pool is expected in the first half of December 2021.
Community comes first
As a fair-launch protocol, Defrost Finance is planning to launch its governance mechanism in December 2021. In order to get Defrost Finance governance kicked off, interim governance rules will be established. These rules are set as temporary regulations by the Defrost Finance team in order to get the governance started, but will evolve over time.
The goal is a 100% community-controlled governance system.
As a governance token, MELT is used by its holders to vote on changes to parameters inside of the Defrost Finance Protocol. Among others, these include stability fees, the H2O savings rate, liquidity mining incentives, minimum collateral ratios, and many others. Voting can also be used to make decisions on the non-technical aspects of the protocol like acceptable LP lists for minting H2O, governance processes, and even electing individuals to fill specific roles.
Our governance begins on the Defrost Finance Governance Forum where proposals are first submitted for discussion. If the community signals its interest and any necessary modifications to the proposal are made, the proposal is submitted to Snapshot for voting.
We are evaluating the possibility of using staked MELT to manage the governance system, to grant MELT stakers additional rights.
Building Future Partnerships
Defrost Finance is planning to integrate more protocols and incentivize new liquidity pools. Currently, the team is in talks with Pangolin, Axial, Hurricane Swap, Wanchain, Huckleberry, etc., to work out partnerships and further integrations. Partnerships will cover cooperative incentives for liquidity pools, additional LPs for minting H2O, and co-marketing events.
More Collaterals on the Way
Defrost Finance will whitelist additional collaterals on Avalanche for minting H2O. These include more qi tokens on Benqi, like qiUSDT, qiAVAX, qiETH, qiWBTC. More LP tokens on Trader Joe. LP tokens on Pangolin. Jtokens on Banker Joe. The MIM pool on Curve, etc.
To further strengthen the depth of the H2O pools and create dynamic markets for transactions, H2O pairs will be incentivized by MELT on Dexes. We will be integrating with dexes like Trader Joe, Pangolin, and Hurricane Swap while negotiating for possible dual incentives
