2021: Development update
Vires.Finance is a pool-based liquidity protocol facilitating lending and borrowing capabilities at rates defined by the market equilibrium.
The year 2021 has been an excellent start for Vires.Finance. The protocol when live in July 2021(5 months ago, 3 of which were early-bird-friendly), then the $VIRES token was fairly launched in October 2021. The accumulated liquidity exceeded 1B, with 360M worth of tokens residing within the smart contract system at the time of writing.
As this year comes to an end, we’d like to share what we’ve been working on for the past two months and discuss the further steps in a bit more detail than outlined in the Tokenomics and Roadmap article.
vTokens: live
vToken represents your share in the total deposit of one asset. Once you’ve deposited funds into the protocol, you can export your deposit as vToken equivalent if you want to move, trade, or exchange your lender position.
Keep in mind that when you export your deposit in the form of vTokens, the smart contract system can’t effectively track who owns it, therefore
- your Borrow Power is decreased,
- vTokens don’t earn VIRES rewards;
USDT & USDC bridge for BSC and Polygon
Thanks to waves.exchange team, the USDT and USDC tokens can now be transferred in and out of waves blockchain. Providing liquidity is now even easier.
Metamask integration: technical preview
We’ve rolled out vires.finance smart contract system to Waves Stagenet and integrated metamask into our testing environment.
Still, many things need to be polished to avoid confusion: waves address format doesn’t match eth-like address displayed in metamask, the same is true for asset ids. Using gateways would mean switching networks in metamask several times; we hope to make the process as smooth as possible.
The metamask integration for the mainnet will be available with the next release of the Waves node.
More statistics
Previously you could only see the last seven days of historical data, which might be a bit too short of a timeframe to build an educated opinion on where the market is trending. This is now fixed.
Governance: Locking VIRES for gVires
The two critical ingredients to successful tokenomics are protocol governance and harvesting the results of the decisions made by the voters.
For the past two months, we’ve been working on the foundation of the protocol governance: gVires.
What is gVires?
gVires(g is for ‘governance’) is a unit of measure of your commitment to the protocol’s future. The longer and the more Vires you lock, the more you are committed; therefore, the more voting power you receive and the more impacted you are by the decisions made.
To obtain gVires, it will be required to lock VIRES. The basis for the (un)locking is the half-life decay formula. The following chart illustrates the timeline for (un)locking VIRES after it has been locked:
We’ve briefly outlined the cases for governance and locking in the Tokenomics and Roadmap article.
The technicalities, boosting mechanics, and the half-life algorithm reasoning deserve a dedicated post/article published in the form of blog post or documentation — the point of this article is to share an overview of the progress so far.
Features in Discussion
Protected Collateral
Protected Collateral is a type of Supply that doesn’t make the assets available for borrowing. Supplying an asset as protected collateral makes it non-borrowable by other participants; therefore, it can always be withdrawn(given health factor remains > 5%). Although even more strict, this would be somewhat an addition to vTokens: Protected Collaterals can’t be borrowed and therefore don’t earn Lending APY nor Vires Supply Rewards. Generally, the feature makes sense for lending and borrowing in terms of completeness: if you bring a piece of jewellery (or an NFT) to a pawnshop, you don’t expect it to be borrowed by someone else and not available to you to get it back.
Adding New Assets
Let’s call liquid, efficiently tradeable assets(even in large amounts) “Big assets” (Every listed asset is considered “big”). Now, we’ll call the assets which only live within waves blockchain or are not actively traded “Small assets.”
Onboarding small assets is a headache: it’s hard to get unexploitable price feed, it’s hard to set the collateral factor right without making the “small asset” useless as collateral, finally, borrowing “big” assets against “small” ones rightfully scares “big asset” liquidity providers(e.g., what if liquidators fail due to dry market?).
Nevertheless, sticking with “big assets” only quickly becomes a scaling problem for every lending protocol. Therefore the risks of “small assets” should be transparent and limited. Here’s how they can be addressed:
- Price feed for small assets: “AMM is an oracle” approach might be the only solution,
- Borrow/Supply caps for small assets: based on the on-chain AMM availability,
- Isolation of risks;
Let’s discuss Isolation.
Approach 1: All against USDN. Depositing or borrowing a small asset denies you from interacting with any markets except USDN. You can only borrow “small asset” against USDN, and you can only borrow USDN against one “small asset” for every account.
Approach 2: Isolated markets. A new market is created for every pair of supply-borrow tokens. If you step in, you understand the risks, and no one else(except those in the market) is subject to it.
The “Isolated markets” approach is more principled: unless you are in it, its problems can never be yours. However, it creates a fragmentation: one can create as many pairs, and the same asset, say USDT, can be supplied for VIRES in VIRES-USDT isolated market as well as in the current big pool of WAVES-USDT-USDN-USDC-EURN-BTC-ETH.
What’s your opinion on the matter? Let us know!
Referral program
Referrals in crypto are tricky. The bottom line is that users immediately start to abuse the decentralized nature of the protocols by referring themselves through additional addresses. gVires discussed above might be part of a neat solution here: it’s locked and can’t be transferred. We’ll continue to evaluate this idea and invite everyone to join us.
Timeline
As we are commited to specific rules and the parameters of those rules for VIRES token that can’t be changed until mid of January, we can barely hold our excitement about the upcoming release featuring gVires. However, we’re happy to use the few weeks left to polish the interface, run additional testing, and have an extra pair(s) of eyes to review the smart contract part.
What to do?
Provide liquidity to pools, earn and stake VIRES, follow us on social media for the latest updates, participate in the discussions on the protocol future:
