Wing Finance Launches “Any Pool”, A Decentralized Lending Pool For Any Asset
Wing, the credit-based, cross-chain platform dedicated to digital asset lending, has launched a new DeFi product titled the “Any Pool,” which allows for the contractualization and lending of almost anything.
Despite significant advances in recent months, most DeFi platforms still lack a simple onboarding mechanism for less traditional on-chain assets. The majority of DeFi lending protocols only accept crypto-native assets with accessible price feeds, preventing non-crypto-native assets such as bonds, or low-liquidity assets from being collateralized and lent out.
Traditional investors are increasingly seeking access to cryptocurrency and DeFi. One way to facilitate this demand is to allow traditional assets to enter crypto markets through the Any Pool. Due to such high demand, which was highlighted in Wing’s governance forum and through the Wing DAO community, Wing has launched the “Any Pool” — a cutting-edge experiment for alternative asset lending.
Any Pool Overview
The Any Pool allows any kind of asset to be collateralized for lending and trading within DeFi. In traditional markets, anything of value that can be re-sold is accepted as collateral by pawnbrokers for lending, with the lending limit depending on a collaterals’ fair market value, liquidity, and price volatility. In the event of liquidation, pawnbrokers agree to collect the ownership of collaterals if the borrower does not repay the loan.
The Any Pool will act as the pawnbroker, accepting traditional assets as collateral for lending, while keeping vital DeFi features including decentralization, trust, and cost-efficiency.
Any Pool Mechanisms
There will be three types of participants in the Any Pool: borrowers, lenders, and liquidators. In most cases, lenders will also play the role of liquidators since the agreement of liquidation is a prerequisite for each lending contract.
Initially, borrowers will need to designate collateral assets, desired assets, debt maturity, annualized interest rate, interest payout frequency, effective date, and expiration date.
Once debts are successfully issued, debt tokens will be distributed to lenders as ownership of debt. Unlike aTokens or cTokens, debt tokens are only redeemable when debts have matured and are repaid. Therefore, there will be a DEX for users to trade debt tokens before maturity to release lenders’ liquidity and swap fixed-rate interest yields.
Two types of debt can be issued by the borrowers: mandatory redemption debt and negotiable redemption debt. When a mandatory redemption debt matures, it will trigger a redemption period if the borrower completely repays the principal and interest, allowing the borrower to withdraw collaterals immediately. With a negotiable redemption debt, the borrower can only negotiate with lenders for redemption during the negotiation period, whereas the lenders can choose to hold debt tokens and trade debt tokens before the end of the negotiation period.
Collateral Criteria
Even though the vision for Any Pool is to allow for any kind of lending to be possible, there are still currently some limitations for accepting assets. Based on relevant research throughout the market, the following assets will be now accepted as collateral:
1. Crypto-native assets
This includes BTC, ETH, stablecoins, and altcoins. Borrowers need to collateralize their tokens and design a fixed-rate borrowing contract. Liquidation won’t trigger when the debt is active, so borrowers are incentivized to increase their collateral ratio to gain competitiveness.
2. DeFi derivative tokens
This includes interest-bearing tokens(aToken, cToken), LP tokens, staking derivative tokens, leveraged tokens, synthetic tokens, etc.
3. NFTs
This includes art NFTs, game collectibles, Uniswap v3 LP NFTs, etc.
4. Traditional assets
In theory, anything with value on the secondary market can be collateralized in the future: real estate assets, accounts receivable, jewelry, antiques, T-shirts, your used Kobe 9 shoes, tickets to mars, etc.
Potential Use Cases
Case 1: Uniswap v3 Concentrated Liquidity NFT as Collateral
As Uniswap published its v3 whitepaper, “Uniswap v3 LP’s will be able to concentrate their capital within custom price ranges”. Since LP’s can choose different price ranges to provide liquidity, LP tokens will be minted as NFTs to represent liquidity within different price ranges. When Uniswap v3 launches, over-collateralized lending pools with liquidation based on oracles can barely collateralize these concentrated LP tokens.
Instead, users can collateralize their Uniswap v3 LP NFTs in the Any Pool. Before issuing a debt based on an LP NFT, the borrower needs to set up desired parameters including the debt period, interest rate, etc. Each LP NFT relates to an independent lending contract, and all LP NFT lending contracts will create different categories by trading pairs, price ranges, liquidity depth, etc.
Case 2: Interest Rate Swapping
Alice invested 10,000 USDC in a stablecoin interest yield protocol and received 10,000 iUSDC (interest-bearing USDC). iUSDC bears 15% APY on average. Bob has 10,000 USDC and wants to make a low-risk fixed income investment through a protocol. Alice issues a 1-year debt in the Any Pool, with an APY of 12%, and 3% is distributed to Bob every quarter. Alice stakes her 10,000 iUSDC as collateral and borrows 8,000 USDC from Bob. In this case, Bob receives 240 USDC interest from Alice every three months. When the debt expires, Alice repays Bob, otherwise, her 10,000 iUSDC collateral will be liquidated.
The Any Pool helps Alice release the liquidity of her 10,000 iUSDC, leverages her position in USDC floating yield. It also helps Bob get a low-risk fixed-income investment.
Case 3: NFT Collectibles as Collateral
Charles is an NFT maniac. He puts most of his money in NFTs and needs $5k for an NFT auction in 24 hours. He has no friends who are able to lend him the money and it will take him 15 more days to receive his monthly salary. Charles must find a way to collateralize his illiquid assets for short-term lending. He picks his favorite CryptoPunk collectible (last bid price $10k, average tx price $50k) and creates a 30-day zero-interest discount debt to raise 5,000 USDT in 24 hours, with a face value of 5,500 USDT. David notices Charles’ lending request in the Any Pool. David also loves NFTs and believes the NFT Charles collateralized has a fair value of $10k. David lends 5,000 USDT to Charles because it is either a one-month 213.8% APY investment or an opportunity to liquidate an NFT with a 50% discount if Charles fails to repay the debt.
Case 4: Security Tokens
Security tokens are backed by traditional securities or security-related assets, with an existing secondary market for most security tokens. Security tokens will be able to be collateralized in a debt position and be open to the public after the liquidation process is fully compliant with KYC/AML regulations.
These 4 cases show the initial mechanism of the Any Pool’s operation and its potential usage, however more advanced ideas can be generated with the development of the industry as well as feedback from the Wing DAO community.
Collaboration
As the proposal was raised by an active team member from UPRETS in the Wing DAO community, UPRETS provided great support to Any Pool’s execution from a business standpoint. As a platform focused on bringing real-world assets into DeFi, UPRETS has 4 major product lines including Digital Securities Issuance, DeFi Lending and Mortgages, Tech Infrastructure and an NFT Aggregator called NFT Bazaar. The first Any Pool fixed-interest trial will be OST-1, one of the asset-based digital securities based on advanced digitalization technology designed for global real estate investors and blockchain enthusiasts powered by UPRETS.
