KeeperDAO, the on-chain underwriter of DeFi, and Gelato, the decentralized automation layer of DeFi, announce a partnership today to protect kCompound borrowers from liquidation. The collaboration comes at a time when KeeperDAO has over $240 million in TVL and Gelato has already proven itself as a reliable protector of liquidation with over $200 million of funds in Maker positions protected on Instadapp.
“The team at Gelato have built a wonderful smart contract automation framework and we’re happy to be able to integrate it into our JITU to help DeFi borrowers prevent costly liquidations. We look forward to working with them in the future to build more awesome DeFi experiences.” — Susruth Nadimpalli, KeeperDAO Core Team
Borrowing and lending have become a cornerstone of DeFi with nearly $30 billion in total locked value in Aave, Compound, and Maker, alone. Yet with borrowing comes the threat of liquidation which has created a need to improve the management of risk in these protocols. That is why in April KeeperDAO introduced kCompound, the second phase of their Hiding Game rollout that lets users deposit collateral and borrow assets as they normally would. Powered by Gelato’s automation, KeeperDAO’s Just-In-Time Underwriter (JITU) protects borrowing from liquidation.
Working behind the scenes, JITU constantly monitors the health of positions opened via kCompound. If a position falls below a certain threshold, then JITU immediately acts on the user’s behalf and provides more collateral as a buffer to keep the position solvent. Once the position’s health improves or if the user adds additional collateral, the buffer is automatically withdrawn and the position is saved from liquidation.
“With KeeperDAO’s HidingVault framework, DeFi is entering its 2nd phase of lending and borrowing. The first phase, introduced by the likes of MakerDAO and Compound, provided users with useful products, in which they manually had to manage their overcollateralized borrowing positions themselves. Now, KeeperDAO improved on that basic functionality by turning regular borrowing products into automated services, which manages the health factor of debt positions automatically on behalf of users. This will greatly strengthen the user experience by outsourcing the managerial work around debt positions from users to bots.” — Hilmar Orth, Co-Founder of Gelato
It’s important to keep in mind that a position can still be liquidated after it is underwritten if the health continues to decline. Only “friendly” whitelisted keepers will be able to liquidate the position and allow the liquidation profit to be split among the user, Keeper, and KeeperDAO. KeeperDAO will always be able to reclaim the buffer provided.
JITU is ultimately a multi-faceted money lego that clicks perfectly into the Compound protocol. KeeperDAO offers the platform for users to place their collateral while Gelato-powered JITU provides a temporary buffer, giving the user time and options to take action over a position rather than have it be liquidated right away. Ultimately, we see collaboration as the first step in Gelato and KeeperDAO working together to make DeFi easier for all.
Stay tuned for more announcements about upcoming collaborations.
KeeperDAO’s mission is to provide the infrastructure to make DeFi more secure, egalitarian, and profitable for everyone involved. KeeperDAO is building the decentralized protocol for Keepers (the Coordination Game) and is providing DeFi with a suite of Keeper-guarded, fully MEV-protected primitives to trade and borrow assets in a safer and more profitable way.
Gelato Network makes it easy for any developer to automate their projects and offers a one-stop solution to fulfill all of their automation needs. Gelato is building the underlying infrastructure for automation to become a foundational pillar of the Web3 middleware stack, enabling trustless, automated flows of value between smart contracts on Ethereum, Polygon, Fantom, and other EVM-compatible chains.