B.Protocol Integrates Gelato To Maintain Liquidation System
Liquidations are preserved by many as a painful yet necessary component of lending protocols, when in fact they are a crucial part of the lending mechanism and one of the leading growth engines for achieving better capital efficiency in the entire DeFi ecosystem. Protocols have deployed strategies such as building a gas auction system or keeping dedicated keepers on payroll, but what if there was another way that users could benefit from? B.Protocol has created a system that incentivizes liquidity providers, rather than bots and miners to liquidate undercollateralized loans within decentralized lending markets. In order to assist with the efficiency of this process, B.Protocol has enlisted Gelato to help maintain the health of their liquidation system.
“At B.Protocol we are building a new DeFi primitive for liquidations. Hence, it is imperative for us to use the most decentralized and battle-tested available ecosystem. This is why Gelato Keepers were a perfect fit.” Yaron Velner, founder and lead developer of B.Protocol
At the heart of B.Protocol’s liquidation strategy lies the B.AMM or Backstop Automated Market Maker. At its just launched V2, users provide LUSD that is utilized for liquidations at Liquity Protocol (e.g., repay LUSD debt in return to ETH collateral), get the usual 16% APY from Liquity Protocol, and after liquidation happens, an automatic rebalance process occurs.
The rebalance consists of converting the seized collateral from the liquidation back to the original asset (e.g., the ETH collateral is converted back to LUSD). This rebalance is done by offering the collateral for sale according to a certain market price that is determined by a price oracle. An optional discount on market price is given according to the imbalance size (the size of collateral to sell), and the exact formula is an adaptation of Curve Finance stable swap invariant.
Yet there are times when B.AMM prices might deviate significantly from the current market price because of a large inventory imbalance. Enter Gelato which will detect this imbalance and automatically trigger an arbitrage transaction with a DEX aggregator. By performing this arbitrage, it will decrease the imbalance and move it towards the equilibrium that is closer to the real market price.
“It is amazing to see how innovative DeFi projects such as B.Protocol can utilize Gelato’s infrastructure to outsource all their DevOps needs so that they can solely focus on improving their core protocol and user experience. B.Protocol built a sophisticated layer which significantly improves the user experience of lending protocol users and we are more than excited to see how they develop in the near future.” Hilmar Maximilian Orth, Legendary Member of Gelato Network
B.Protocol has over $45 million in TVL and is a shining example of what could be built on top of lending protocols that is catered towards benefiting users as well as the platforms themselves. By utilizing Gelato automation, B.Protocol doubles down on that mission while also decreasing their core dev workload.
About B.Protocol
B.Protocol is a Backstop Liquidity protocol, handling liquidations in scale for DeFi lending platforms. By creating a transparent, committed, smart contract-based liquidation system, B.Protocol enables better capital efficiency for DeFi users, while creating another layer of stability for the lending platforms themselves. As liquidations are the main growth engine for DeFi, The B.Protocol backstop solution is unleashing its growth potential.
About Gelato Network
Gelato Network is Web3’s premier automation network, enabling developers to automate a wide variety of arbitrary smart contract executions on and across all EVM-based compatible blockchains such as Ethereum. Examples of use cases developers have built on top of Gelato include Limit Orders on AMMs like Uniswap, automatic compounding of yield farming vaults, Aave liquidation protection, MakerDAO debt ceiling updates, automated liquidity management, and even the petting of Aavegotchis.
Our ultimate goal is to automate everything and by giving developers the reliable tools they need to do this, we can empower their users to get the most out of their Web3 experience.
►Check out what we’ve been working on at 🍦https://gelato.network/🍦
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