EasyFi Version 1: Volatile Asset Markets
Launch of volatile asset money markets on Matic Network
We are stoked to announce the launch of EasyFi Network’s Volatile Assets Markets effective today — 9th December 2020 at 18:30 Hrs IST / 13:00 Hrs UTC. With this launch, we are now officially making a shift in the protocol from Version 0.0 to Version 1.0.
The launch of this new market segment makes EasyFi Network the first DeFi application outside the Ethereum ecosystem and first on a Layer 2 (Matic Network) network to launch decentralized lending with volatile assets.
As per our Q4 plan of setting up this new market for our lending protocol, in our initial phase, we are going live starting with the ETH market. We will shortly be adding the following volatile assets as well — MATIC and WBTC. This will be followed by others in due course of time.
This evolution of EasyFi required several new processes and systems to be integrated.
- We updated our Risk Management Systems after simulating all possible risks and took measures to mitigate them all.
- We had to ensure that we had a robust Liquidation Mechanism put in place so that the investors assets are protected. We added a new dashboard for this change which will allow the users (institutional and retail) to manage the liquidation process. Same shall be live in the next 48 Hours of launch of version 1.
- And most importantly, we integrated and tested Chainlinks Price Feed Oracles that finally brought us to this vital launch in our roadmap.
Volatile Asset Markets V1
The launch of Volatile Assets Markets unleashes great innovation to the evolving DeFi ecosystem on the Matic Network.
- New collateral options being added shall bring in new suppliers and infuse greater liquidity to the protocol and the network. This will add to the flexibility & agility to avail multi collateral type loans on volatile assets too.
- Volatile Assets market presents opportunities to our users for getting long and short exposure on assets at minimal costs.
- We believe that the new markets, while catering to user demand of various assets, will reduce operational costs and will ultimately add to the alpha of the overall exercise. The benefit of these cost reductions grows multifold in defi especially due to intertwined nature of transactions.
- The speed with which we expect transactions to go through on Layer 2, opens up arbitration possibilities on certain assets on all money markets.
- IR models are carefully designed in a manner to optimise cost of loans through interest rates. While all parameters for stable coin markets remain same as V0, same has been set for ETH markets as follows:
- Collateral Factor: 70%
- Reserve ratio: 10%
- Safe Max: 10%
- Base Rate: 2%
- V1 contracts are optimized to include SAFE MAX option that prevents excessive exposure in case of extensively volatile assets and provides a cushion against event based liquidation.
- Currently, the SAFE MAX is kept at 10% for each market which means users l be able to ensure that they don’t avail 100% of their borrow limit and maintains 10% margin safety cushion to mitigate risk from event based liquidation ( Sudden drop/rise in market price of an asset).
- The SAFE MAX also optimises gas costs for transaction completion on the network thereby making process hassle free and swift.
- We have designed a dedicated dashboard for liquidation for all users which has a wider scope than those of the traditional mainchain money markets. (Read more here: New Liquidation Mechanism Integration). This dashboard shall be live in the next 48 Hours from the launch of version 1.
The implementation of this new market on a layer 2 network was a test of our coordination skills since it has been evolving and not done before. This being an implementation with three different platforms joining hands to create money markets — Matic, Chainlink and EasyFi — the on-time delivery was challenging. However we are super stoked by the support provided by our partners in making this endeavour successful. With their support, we move on to the next steps in this journey:
- New addition of collateral markets — The advantages of speed, costs and overall management of the protocol will add more possibilities as newer additions are made to our collateral markets. Apart from over-collateralized loans, we will introduce the world to more consumer centric loans under microlending, payday lending, etc. Stay tuned here!!
- Focus on under collateralized loans — We have noticed a huge gap in the current digital asset lending market that needs to be bridged. There is a huge chunk of individual / retail consumers who may have been forced to opt-out of lending protocols due to the high collateralization ratios on lending protocols. This has led us to focus more on the borrowing side of this system in which we will bring down the cost of borrowing through our unique approach towards under-collateralized loans.
We have already pushed the paddle and pulled up our socks to achieve what is not available yet in the DeFi lending sector. Attaining the optimum collateralization ratio opens the door for a huge market for EasyFi. While working on the identity layer, to achieve the milestone, we are confident to progress swiftly in this direction.
To learn more about $EASY and EasyFi, please go through our whitepaper and other articles on this publication.
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