Idle Finance: A Groundbreaking Contender to the DeFi Arena

Previously, the global financial structure has generated enormous wealth, but its concentrated existence ensures that the spoils have gone to societies that are well-connected to the world’s financial centers. As inequality continues to grow, technical advancements and accelerated acceptance render now the ideal moment for the emergence of a modern decentralized finance structure. So far, the most popular products have focused on lending/borrowing crypto properties. On the Ethereum blockchain, many high-quality decentralized applications have been developed, allowing users to borrow and lend without the use of intermediaries.

Anyone, anytime may access decentralized lending goods, which need just an Ethereum wallet. Today, these goods are still in use, with gross USD amounts in the hundreds of millions. Indeed, citizens will now lend on decentralized lending networks to gain passive income from borrowers’ interest payments. With the proliferation of modern protocols and the reality that interest rates adjust at a block-by-block basis, crypto-lenders find it challenging to maximize their financial returns. To do so, they would constantly track and physically transfer funds from one protocol to another.

Here’s Idle’s solution: with Idle, you can easily obtain the best possible rate through several lending providers. It is non-custodial and has a shared rebalance, which encourages consumers to pool to get the best deal without depending on a centralized mechanism.

What About Idle?

Watch this video to learn more about Idle Finance:

Background of Idle Finance

The Idle Protocol team participated in the Gitcoin Outside Blockchain hackathon project in the summer of 2019, before going on to the Consensys Tachyon acceleration initiative.

During the course of 2020, the protocol was expanded by incorporating properties and underlying protocols. In November 2020, the team unveiled a governance structure modeled after the Compound and Uniswap models.

Idle Finance provides a completely decentralized platform with a website, screenshots, and on-chain votes to encourage group engagement in the network to promote fresh ideas and topic debate.

The Community has agreed to create the League framework as a result of the most recent Community Forums, which would enable the community to formulate a roadmap through such discussions and then take proposals with the most energy across the growth and incorporation processes.

How Does Idle Finance Function?

Idle Finance deposits are immediately redirected into Compound, Aave, and dYdX. Idle fully automates and optimizes the interest accrual mechanism for end-users, ensuring that they still receive the best interest rates across the above platforms.

Instead of relying on a single yield supplier, Idle Finance users gain access to several yield farming opportunities through exploiting algorithms that execute optimization strategies by yield rebalance in the protocols of choice.

This saves time and money, and it often decreases threats due to the use of DeFiScore risk thresholds. In contrast to other yield aggregators, the Dynamic Rebalance mechanism enables funds to be deposited in several protocols at the same time, preventing being tied to a specific network and increasing resistance to hacks and glitches.

The Rebalance Process of Idle Finance

The rebalancing mechanism, which was inspired by numerous articles in the DeFi domain, would have gone through the following steps:

1. Idle “plays” Fulcrum iDAI and Compound cDAI on-chain interest loan prices.
2. If the interest rate on, say, iDAI is higher than the interest rate on cDAI, Idle rebalances from cDAI to iDAI. If the interest rate on cDAI is higher than the interest rate on iDAI, Idle rebalances from iDAI to cDAI.
3. To minimize false-positive signals, idle may provide additional rationale such as a minimum rebalance time or a minimum percent threshold.
4. Users now immediately get the best interest rate on their DAI.

However, it may have been centralized, with consumers having to focus on a centralized automated framework to still have the best possible rate on the market.

When a user deals with Idle (minting or redeeming tokens), an automatic rebalancing of the pool occurs if necessary; however, there would be an accessible mechanism that enables users to rebalance the whole pool location.

Users would be encouraged to rebalance their own slots, thus rebalancing all of the others. This is a decentralized rebalancing that employs Adam Smith’s invisible hand theorem, which describes the unintentional social gains of an individual’s self-interested behavior (in this case, the users’ ability to receive the best yield on the market). One for all, all for all.

The smart contract returns a sum of ERC20 tokens equal to the user’s pool share to the user’s wallet. Each idleToken reflects an investor’s proportionate ownership of the entire pool as well as the income produced by Idle. This way of managing securities is close to those of conventional mutual funds, and it requires Idle to be non-custodial. Users can, in reality, reclaim their idle capitals at any time.

I’ll send you a quick example: suppose a user needs to use our platform to maximize her lending returns.

A consumer sends DAI to the Idle smart contract and then:

As a first phase, Idle examines the various interest rates and, if possible, rebalances the whole pool, transforming the pooled tokens into the tokens (iTokens or cTokens) with the highest interest rate.

Included in the same exchange, the Idle smart contract would mint idleDAI at the pool’s existing NAV-per-share rate (e.g., 1 idleDAI = 1 DAI at first, and then the idleDAI value will increase at the rate of accumulated interest rates).

Users will reclaim their tokens at any point by burning their idleDAI and collecting the accumulated interest (as well as the expended capital), rebalancing the pool if necessary.

In keeping with the DeFi spirit, we agreed to allow Idle free of charge. We built our sandbox with Idle, where we can experiment with different revenue models and provide consumers with a new kind of token experience.

Beyond Blockchain hackathon was our first accomplishment: our squad earned the second prize of ConsenSys Labs bounty, which fueled our drive to continue developing Idle.

Strategize

Idle currently has two allocation strategies:

1. Best-Yield: This approach incorporates various capital markets to include the highest interest rates instantly, outperforming the best conventional offerings through interest-bearing tokens and DeFi protocols.
2. Risk-Adjusted: This approach dynamically adjusts asset distribution to find the best balance between risk and yield.

DAI, USDC, USDT, SUSD, TUSD, and WBTC are actually supported as underlying tokens by Idle.

Depositing

Liquidity Providers will earn these tokens in accordance with the amount of liquidity they offer for the next 24 months. 0.5 IDLE per block would be allocated linearly over the above time frame.

You are already able to have liquidity in Idle’s pool if you have a pocket and sufficient funds (remember to account for petrol costs!).

By pressing “Deposit,” you can choose a certain pool (for example, IdleDAIBestYield) and have liquidity there.

To deposit your DAI into Idle, you must first accept Idle’s Smart-Contract. Your wallet will appear and prompt you to validate the process by submitting a transaction (this action will cost you a small amount of ETH, but it is inexpensive). After that, you may deposit your assets.

After depositing money, you can begin to gain yields and collect governance tokens ($IDLE and $COMP).

Withdrawal

To deduct your money, go to the dashboard, press “Manage,” and then “Redeem.”

You may assert all Idle properties or just governance tokens ($IDLE and $COMP) here. Your payment would be easier if you received less than the “Available balance for Cheap Redeem.”

Tracking

The Idle dashboard helps you to watch the number of governance tokens collected and the amount of accumulated interests over time.

You may also use the platforms mentioned below:

1. DeBank
2. Zerion
3. Zapper

Although the project is still in its early stages, they are already seeing considerable interest from integrators around the room, with several potential use-cases ranging from simple APY boost for dApps/protocols like Harvest or yEarn, to DAOs’ revenue stream with Pool Party, and generally Idle protocol is the perfect component to create a yield experience for to complement a variety of DeFi products or platforms.

Total Value Target Locked

We especially like the Idle team’s focus on security and safety, as shown by their Quantstamp verification and complete reports accessible on their website idle.finance. As of January 26th, 2021, the network is handling somewhat more than $67.2 million dollars, and this figure is anticipated to increase rapidly as the protocol matures and integrations with complementary protocols take effect.

Key Players’ Support

After beginning as a hackathon project in 2019, Idle was chosen for the ConsenSys Tachyon accelerator program, which connected the team with sponsors, developers, and other members of the DeFi group. Following their performance, the team completed a seed funding round, raising more than $1.2 million from big industry names such as Consensys and Dialectic.

Idle Finance Token

$IDLE is the Idle protocol’s Governance token.

According to CoinGecko, Idle has 1.354 million tokens in circulation at the time of publishing, with a maximum circulating stock of just 13 million.

The Idle Token has recently been introduced to the SushiSwap Onsen Menu and is now accessible on Uniswap.

Each IDLE token represents one vote in the Idle Governance scheme. IDLE token holders may vote by self-delegation or by delegating voting to any Ethereum address.

The Governance oversees the protocol’s policy actions, allowing group members to drive and relate to the protocol’s potential innovations.

Roadmap: What To Expect

The Idle group has recently discussed the forward roadmap in order to determine the protocol’s goals for potential progress. Based on this debate, a matrix has been created to aid in the initial emphasis of growth on high impact, low commitment projects that would be prioritized for development in the near term.

1. Rebalance workflow improvements: We are introducing a solution for improved fund management by switching funds from one lending protocol to another, eliminating a potential edge case situation.
2. Smart contract audit: We are already working on a revised edition of the smart contract, which will be audited as soon as possible.
3. Improve the onboarding process: We are developing a simple and succinct onboarding UX for both seasoned and beginner ETH users.
4. Create new fun mini-products based on idleTokens: Stay tuned for more details.

Final Thoughts

We assume that Idle.Finance is a creative and one-of-a-kind addition to the DeFi ecosystem, and that its growth would be propelled by sustained interest from integrators and developers.

We are also seeing continued involvement in Idle.Finance throughout December and January 2021, with contributions to create a Smart Treasury established by Asaf Silman, which will launch soon based on the final peer reviews that are currently being conducted.

Emiliano Bonassi, who has been designing Yearn v2 Strategies for Idle.Finance, has made additional contributions.

We anticipate an extension of the platform’s available strategies, as well as increased integrations and usage cases, to facilitate the long-term growth of Idle Finance as a core player in the DeFi ecosystem.

Idle.Finance provides a snapshot into the potential of Decentralized Finance by making it more affordable to ordinary citizens searching for more appealing Yield Generating options that are not available in the conventional finance market.

Originally published at https://eliteclubsignals.com on May 10, 2021.