Stellar is getting supercharged with Soroban — the new smart contract platform being added to the network. Access to smart contracts will completely change how assets get used on Stellar. Blend plays a key role in this evolution, providing Stellar-native lending and borrowing capabilities for asset issuers, DeFi protocols, DAOs, and financial institutions.
Blend is a liquidity protocol primitive. It’s the foundation on which safe, efficient lending pools are created by anyone. An entity can create a lending pool to enable users to earn interest and borrow assets, all while being insured by a unique backstop module. Creators are given plenty of controls — from supported assets, collateral requirements, custom oracles, and immutability — such that almost no use case is left out.
There are no requirements to deploy a Blend lending pool, anyone can utilize this tool to bring additional functionality to their Stellar based assets! However, there are requirements to enable interaction with pools, as permissionless deployment can lead to spam and attempted scams with fake pools. To combat this, lending pools need to have a minimum amount of funds in the backstop module before anyone can use them.
After creation, Blend lending pools adapt to market conditions to ensure all capital is used efficiently. If assets aren’t being utilized effectively, interest rates will lower to entice more users to begin borrowing, and vice versa — no DAO proposal required!
All of this occurs while suppliers to a Blend lending pool remain protected by the backstop module. In the event of bad debt, stolen funds, or other loss, backstop module funds are used to replace assets for suppliers. Further, Blend’s liquidation engine helps ensure that damage is limited in the event an oracle is exploited.
To get a deep dive into the nuts and bolts of the Blend Protocol — please check out the whitepaper here: https://github.com/blend-capital/blend-whitepaper
Stellar Ecosystem BLENDED
The introduction of Blend has a variety of awesome implications for the Stellar ecosystem. Generally, it attracts on-chain capital, and improves market liquidity and efficiency.
This improvement is driven by the exciting use cases Blend enables. These include:
Stellar is already a great blockchain to build financial platforms on. Wallets can utilize the existing ecosystem to provide users with cheap payments and remittances, all while users retain custody of their assets. Wallets can create Blend lending pools (or integrate existing ones) to offer their users lending and borrowing capabilities, enabling them to generate interest or get liquidity. This results in an on-chain user experience that rivals the best centralized financial service platforms.
Blend provides Stellar DEX traders with borrowing capabilities, providing them with leverage and short selling capabilities. This completes the trading experience — allowing the Stellar DEX to act as a legitimate alternative to centralized exchanges.
DAOs BLENDED — a YieldBlox Case Study
The YieldBlox DAO was created to bring lending and borrowing capability in a decentralized way to Stellar. They have decided using the Blend protocol as the backbone for their lending and borrowing features will allow them to bring a safer and more efficient product to market, while focusing on how to facilitate an Aave-like product on Stellar. Read more about their announcement here: https://medium.com/@markus_0/kicking-off-the-yieldblox-dao-9e7cfdcca03e
Much of DeFi is built on borrowing. CDP protocols like MakerDAO allow you to borrow their stablecoin against collateral, synthetics protocols like Synthetix allow you to enter synthetic positions by borrowing a synthetic stablecoin against their protocol token. Protocols like these could be built using Blend as a base layer to handle their accounting — improving security in a budding ecosystem.
Ultimately, there’s a lot of ways to leverage Blend as a powerful addition to other products. If you’re interested in building an integration like this, hop in the discord and tell us about it!
Disclaimer — Token
At this moment, there is NO BLND TOKEN. The BLND token will ONLY exist once the protocol is live on mainnet.
Things to look out for —
For those of you that want additional insight into the decisions made while designing Blend, Script3 will be releasing a stream of blog posts covering everything from why there’s no DAO to what building this on Soroban was like.
For those that just want a taste of liquidity protocols built with Soroban, a testnet version of the protocol will be released shortly after Soroban is released on testnet.
For anyone with other questions or a desire to contribute, please join the Blend Capital discord!
Blend Website: https://www.blend.capital/