Instrumental Finance: the cross-chain strategy hub for Picasso
The epicenter of most DeFi activities lies in liquidity provisioning (LPing) where liquidity providers (LPs) provide funds to strategy pools in search of the best yields. This task of ‘farming’ yield has increasingly become attractive for users but as yield opportunities expand across different layers and chains the complexities involved in obtaining maximum yield are also increasing. As an example, yield opportunities on Picasso, though highly attractive, may not be easily accessible to ETH-native users that are unfamiliar or unequipped with the infrastructure to participate within the DotSama space.
Instrumental solves the complexities of accessing yield on multiple layers and chains by virtue of Composable Finance’s core ethos: interoperability! By tapping into Composable’s Mosaic, Instrumental is able to access a variety of different chains and layers in order to maximize yield generation. This gives it a major advantage for liquidity providers and is part of why Instrumental will play a major role and drive volume in the Picasso ecosystem. Simply put, Instrumental will act as the gateway for accessing the yield opportunities on Picasso.
A vital access point and strategy hub for Picasso
Picasso is positioned as a cross-chain hub for the innovation and realization of opportunities within the tools on Kusama. However, the DotSama ecosystem is relatively hard to access. As an evolving ecosystem, DotSama is still improving in terms of UX, a critical factor for onboarding users into any ecosystem. For instance, Polkadot.js which is currently the most used wallet does not entirely have an intuitive interface for the average DeFi user. This is especially true for newbies looking to try their hand at some of the yield opportunities available on DotSama-native protocols.
Hence, we understand the challenges of not only users seeking to access yield on Picasso but also the challenges that Picasso faces as a protocol operating on the DotSama ecosystem. Instrumental has thus been positioned as a cross-chain strategy hub to allow users to seamlessly access the opportunities presented by the broader array of primitives on Picasso. Notably, Instrumental, as an access point to the Picasso ecosystem, also drives a new user base towards Picasso, in turn increasing and bootstrapping liquidity. It accomplishes this by bridging assets that are deposited on Instrumental vaults to Picasso in order to allow users to automatically capture yield opportunities within the Picasso ecosystem. This means that instead of dealing with the complexities of directly bridging their ERC-20 tokens, users can deposit funds into the Instrumental Vault and harness the Picasso strategies and APY automatically.
A comparable model is Orion Money and Terra. Orion’s concept is quite simple: LPs can earn approximately 20% on Anchor on their UST on Terra. Orion does this in a simple way by allowing users to deposit ERC20 stablecoins in its vaults and in return, LPs earn 15% yield. These stables are then swapped to UST, bridged over to Terra, and deposited into Anchor for a 25% fee on the 20% yield.
Following a similar path, Instrumental can therefore facilitate the following:
- Users deposit ERC20 stablecoins into the Instrumental Vault and receive a receipt token.
- Instrumental then bridges these assets over to Picasso using Mosaic, a pallet on Picasso that functions as a transfer availability layer and liquidity router to DeFi bridges.
- To help users optimize their yield positions, Instrumental automates this process for the best available APYs for their deposit
- As a strategy booster, most of the yields generated flow back to the highest earning opportunities within the Picasso ecosystem.
- Upon LPs’ request, Instrumental will bridge back the assets and the users can withdraw them effortlessly.
In the future, users will be able to access strategies from the Picasso ecosystem on any Mosaic supported chain. This is an important development, essentially providing even more opportunities for Instrumental to bootstrap liquidity for Picasso. The Picasso ecosystem stands to inherit a multitude of benefits as users indirectly supply liquidity to Picasso through Instrumental from numerous chains.
Instrumental Finance is excited to play such a pivotal role in the Picasso ecosystem and to be able to offer users a chance to access the earning opportunities within the ecosystem. There are many more exciting updates to come, so stay tuned!
For all things Instrumental, follow us on our socials:
