Insider Series: Introducing an Innovative Approach to Lending Pools
- Launching New Series to Understand Omins in Depth
- Introduction to DeFi’s 1st Dual Asset Lending Pool model for every asset.
- With Omnis, users can create a token-to-token pair in a permissionless manner.
- The two assets in the pool can be any token supported on that chain, not just few
- Dual Asset Pool Model provides security against the volatility of assets.
With UniLend v2: Omnis, we are not just bringing incremental updates to UniLend. It’s a massive protocol update and will redefine how DeFi leads the new financial infrastructure for money markets.
We are launching a brand new Educational Series to help our community understand Omnis’ ingenious features.
UniLend Omnis is a revolution in DeFi. We at UniLend are dedicated to making all assets productive. Our team has been working on building permissionless lending and borrowing to enable money markets for every asset. Omnis is more than just a technical update for UniLend. We have worked on many innovative approaches to make our vision come true.
This initiative will aid our community members to get a deeper understanding of what UniLend Omnis is and how it works. Not only this, we are keen to spread the broader vision that UniLend has and how we are planning to make this a reality.
This brings us to the first and very important feature of Omnis -
Isolated Dual Asset Lending Pools
With Omnis, for the first time in DeFi creating a lending/borrowing pool for nearly all token-to-token (eg. ERC20/ERC20) crypto asset pair is permissionless. This means anyone can interact with our protocol and leverage a wide range of new DeFi strategies that will be made possible with permissionless listing of nearly all crypto assets.
Lenders will have the power to earn a risk-free yield on major crypto assets and a long list of tokenized assets. In addition, one can quickly deposit their tokens on UniLend Omnis or even create their pool if it doesn’t already exist.
Borrowers can leverage the lent assets using collateral. This is advantageous for users who wish to interact with other protocols by borrowing their native assets without losing their current positions.
How does UniLend’s Dual Asset Pool model work?
In UniLend’s permissionless money market, any user can create any ERC20/ERC20 pool to begin lending and borrowing for those assets. UniLend V1 money market is live on the three leading blockchains; Ethereum, Polygon, and Binance Smart Chain. UniLend Omins will be launching on the above-mentioned chains and more.
To enable the money market for such volatile assets, the UniLend team has created an innovative Isolated Dual Asset Pool model, which means that every crypto asset pair will exist as an independent pool and has no cross-collateralization.
This kind of isolated model ensures a higher level of security where the volatility of one asset doesn’t affect the entire protocol (unlike Aave, Compound, or other money markets which have a cross-pool mechanism) and is limited to a single (or few) pool.
Let us understand this better with an example.
- Alice has 10 ETH, and she wants ENS for farming and a position in USDT for a long. However, she is bullish on ETH 2.0 and doesn’t want to sell her bag.
- Alice deposits 5 ETH in ETH/ENS and ETH/USDT pools each & borrows ENS and USDT.
- If ENS spikes in price, and Alice is at risk of liquidation, then only 5 ETH allocated to ETH/ENS pool will be liquidated.
- The other 5 ETH in ETH/USDT pool is entirely safe from being liquidated.
This dual asset pool model combined with the dynamic interest rate model also incentivizes users based on the pool to lend their assets to. In addition, Unilend sets a proportional risk-reward ratio for lending an asset absent from a multi-asset single pool currently shared among significant protocols.
Beginning of a Journey
UniLend team has pioneered an innovative lending model to mitigate the risk of adding low-volatility assets. This approach is set to change the face of DeFi with our Isolated Dual Asset Pool allowing nearly every asset to be lent and borrowed. UniLend’s vision of making every asset productive is close to becoming a reality.