Introducing — Protocol-owned Money Market

Unleash the full potential of your assets

In our previous introductory article, we presented an overview of Edge’s three cornerstone products:

1. Customizable pool creation
2. Edge Marketplace
3. Stability Reserve

Today, we’re excited to announce the first phase of our ‘customizable pool creation’, along with the transformative use cases and benefits that it’ll bring to the protocols and communities.

Introducing ‘Protocol-Owned Money Market’

Edge Protocol’s customizable pool creation makes it possible and easy for any protocols to create and own their own money markets. Owning the money market gives many edges to a protocol and community as follows:

1. Token utility maximization

Given the fast-paced nature of DeFi, where new opportunities and choices arise every second, the main goal of many investors and participants is to focus their capital on assets that provides either utility or additional revenue streams.

To that end, money and lending markets play a very important role in enabling these additional use cases.

If an asset is listed on a money market, it can be:

• used as collateral to
• borrow other assets to short
• borrow stables to invest in other assets
• borrow stables to buy the same asset (leveraging)

However, it is often very difficult for individuals or protocols to be able to list their assets on traditional cross-collateral money market. This is mainly due to a combination of

• the risks associated with introducing longer-tail assets into the market
• the long proposal and approval process

While the reasons above are definitely warranted, it does mean that only a select few out of the thousands of assets that are available can ever be listed on these platforms.

Edge instead takes a different approach by allowing anyone to create isolated lending markets, where each pool created are fully independent of one another. This means that any risks introduced into a pool by the pool creator, either through the assets allowed or the pool parameters (more on this below), is solely contained within the market with no chance of affecting others.

Given the proper structure and parameters, this will allow protocols and other pool creator to list longer-tail assets, such as their own protocol-native assets, to be lent, borrowed, collateralized by both themselves and others.

Individuals also win from this approach because they can achieve more capital efficiency with more strategies available for their assets.

2. New revenue stream for protocols

Despite the huge amount of tokens in the market, most of them are sitting idly. Even in money markets, tokens don’t earn protocols any revenue, except in the rare occasion where protocol acts as a lender in the market.

Whilst creating benefits for communities, protocols can fully utilize those assets by creating their own pools on Edge Protocol.

Here are some use cases where protocol-owned money market can be integrated into protocols’ operations:

• Generating revenue stream
  Any activities happening in the protocol-owned money market become new sources of revenue (e.g., protocols earn some portion of borrowing interest when borrowing happens)
• Treasury management
  Protocols can utilize their tokens in treasury with its own money market without the need to sell. Protocols can also earn additional interest on top of it by acting as a lender in that pool.
• In-house operations
  Protocol-owned money market can acts as a building block for protocols that require lending mechanism (e.g. margin trading, leverage yield farming) within their operation, without a single line of code needed.

Create protocol-owned money markets with Edge Protocol

Through Edge Protocol’s front-end, any protocols can become money market owners without the need to build the markets themselves and customize the following parameters:

1. Oracle & Asset Listing
2. Risk parameters for each asset — collateral factor, borrowing factor, etc.
3. Interest rate model — select the target utilization rate model
4. % fee shared — select percentage of fees collected from transactions across your pool
5. Whitelisted contract — select whitelisted contract address for a specific group of people

Edge is committed to create the product that is truly driven by communities

Besides facilitating pool creation, Edge Protocol emphasizes on being a ‘marketplace’ of lending markets where individuals have complete freedom to choose the lending market they prefer.

Most importantly, Edge Protocol’s pool creation is not meant to be exclusively for protocols and businesses.

It is designed for everyone.

With the ultimate goal of being ‘permissionless pool creation platform’, we have broken down our operations on pool creation into 3 phases:

1st phase — protocol-owned money market

2nd phase — community-owned money market

3rd phase — “be your own bank”

In our first phase, protocol-owned money market, we’re partnering up with protocols and dApps built on Terra to bring this idea to life and show how it can benefit both protocols and individuals.

With Edge Protocol, the narrative of money market has changed. We are in the momentous transition––from the market that is directed by a certain group of authorities to community-owned.

The Edge of the people is inevitable. Stay tuned.