Introduction to Zumer Protocol
Changing the DeFi, NFT & Metaverse landscape
NFTs are amongst the fastest rising sectors in Web3, with total NFT sales in 2021 reaching $25 billion as per DappRadar, which is a whopping 25,000% increase from 2020. NFTs have been quickly adopted by famous musicians such as Snoop Dog, sports leagues such as the NBA and famous brands such as Gucci, because they offer a novel way to interact with fans and create communities.
However, NFTs have a liquidity problem: In order to get liquidity out of an NFT, the owner has to sell the whole NFT. It cannot be sold in a fraction (though there are fractionalization products, they come with their shortfalls with weak demand). Since NFTs give their owners access to valuable communities, they are most of the time reluctant to sell their NFTs. This has become a big problem for the entire NFT market and therefore, Zumer was born to solve this liquidity problem.
Zumer Protocol is a non-custodial liquidity protocol with a novel credit and liquidity risk management mechanism to allow permissionless loan origination for NFT assets by segregating different risks to different liquidity providers. It also offers the BNPL option for NFT buyers with a certain percentage of down payments, lowering the entry barrier for collectors and gamers to own blue chip NFTs and Gamefi NFTs.
Zumer connects borrowers with lending pools. This way borrowers can pledge their NFTs as collateral, and receive a loan of the desired liquidity without having to sell their priced NFTs. Alternatively, lenders can earn a yield by providing liquidity to the protocol while underwriters can generate arbitrage profits from using the protocol.
Zumer loans are secure, instant and permissionless:
Security: Zumer loans are secure because Zumer integrates a traditional banking risk management system with a Web3 model that guarantees security and reliability. Most of the DeFi protocols claim they are trying to replace banks. However, most of them run like a brokerage model rather than a banking model. Zumer applies a real-world banking approach by adding a provisioning pool and an underwriter role to the DeFi landscape to protect users. This provisioning pool or underwriter can repay lenders in case of a default even before the underlying collateral has been redeemed. Additionally, Zumer’s liquidation insurance also offers protection for NFT owners to avoid losing their ownership amid absurd market conditions. Built on the Ethereum blockchain, it provides a trustworthy way to create NFT-backed loans at scale.
Instant: Zumer loans are instant, because with the protocol’s unique dual-pool system, NFT owners and buyers (through the protocol’s BNPL tool) can get instant liquidity from the protocol. Zumer also has a marketplace for borrowers to sell their NFTs.
Permissionless: Finally, Zumer loans are permissionless because Zumer is partnering with DIA, an oracle provider to apply a decentralized price feed for NFTs to the protocol. With that, Zumer is able to price NFTs based on a set of rules written into the smart contract and lend out loans in a permissionless manner. Zumer will start with underwriting bluechip NFTs such as Bored Ape Yacht Club, Moonbirds, CryptoPunks, Azuki, Clone X, World of Women, etc.
Experienced Team: Zumer is powered by the Sumeria Labs team. Founding team members of Sumeria Labs are from MIT, Harvard, Cornell, JP Morgan, Goldman Sachs, BlackRock, Proof Collective. Our CEO, Sy, is an early investor in the DeFi 1.0 projects. He has spent a lot of time discussing with our tech advisor, Ed, who was the first developer of ETHLend (now Aave), how to improve the current risk model for the DeFi protocols and eventually come up with a new risk management design. The team is supported by some reputable investors such as Outlier Ventures and Dragon Roark. Zumer’s core premise is security for both borrowers and lenders.
Vision: Zumer’s Vision is to become the first decentralized and community-driven bank for NFTs and the metaverse, featuring an NFT-backed credit card, buy now pay later services and further credit products alongside the NFT liquidity protocol.
Zumer will bring real-world banking to Web3 by decentralizing decision-making processes such as interest rate setting. In other words, Zumerians (the protocol’s stakeholders) are actually the central bankers of the protocol. For further explanation on how this is determined, you can refer to the website.
We are excited to launch the Zumer Protocol to bring the NFT liquidity market to the next level with our novel risk management model, professional leadership team as well as secure and instant loan underwriting capabilities.
