zkLend: One's best shot to keep an eye on
zkLend: One's best shot to keep an eye on
This week week Newsletter is brought to you by courtesy of Permissionlessness.ETH & zkLend. A New Evolution in shaping the future of Liquidity Protocol (Birthing the era to money market protocol).
Looking for the next AAVE you missed in the OG days, There you have it at StarkNet Ecosystem.
zkLend is an open source money market protocol (borrowing & lending protocol) on StarkNet.
It has two core products:
Artemis: Permissionless service for DeFI user.
Apollo: Permissioned Service for institutional clients like SMEs, Hedge Funds e.t.c This is KYC based.
A Collateral is supplied before an asset is borrowed on Liquidity protocols like Aave, Compound Finance e.t.c
Let’s see how zkLend does a good job here.
zkLend Mechanics (The Lend & borrow Strategy)
For Artemis (DeFI Users)
How does this work?
Users deposit their assets in a reserve pool (money market) with no lock up period, thereby providing liquidity.
Users earn interest from the pool, in return having zTokens (e.g zDAI) which represents their deposited share in the pool.
Users can then borrow assets in the money market against their collateral and zTokens is used to determine the borrowing capacity.
Unlike just supplying collateral & borrowing without extra yield in most protocols, you make extra yield from your assets (in zTokens) while also being able to borrow assets with the deposited collateral.
For Apollo (Institutions)
How does this work?
Users will have to be whitelisted (KYC verified) as permissioned participants before using the protocol.
Whitelisted participants earn interest in the reserve pool with no lockup period, also having zTokens as their deposited share in the pool.
They can equally borrow assets in the pool from whitelisted addresses.
zkLend supports flash loan just like AAVE and DyDx, if you’re not familiar with flash loan, then see this below.
zkLend uses Empiric Oracles to monitor markets in real-time & avoid price manipulations that can result from flash loans.
zkLend use cases
This makes zkLend more than just a borrowing & lending protocol
Liquidity providing: Earn passive income from the pool as an LP while borrowing assets.
Shorting: while bearish on “x” asset you can deposit a stable as collateral, borrow “x” asset, sell to stable and buy more when the “x” drops in price.Then you can repay the amount you borrowed and have more “x” asset.
Leveraging: while bullish on “x” asset you can deposit “x” asset as collateral, borrow a stable and buy more “x” asset. The user now has more position of the “x” asset.
Arbitraging Assets with different price discrepancies on various DEX to make profits, this can be done using flash loans.
DeFI Protocol Funding: Lending of undercollaterized loan to DeFI protocols which suits better than the common method of liquidity bootstrapping.
Institutions whose funds are banked base, zkLend provides cash management which they can use to hedge against inflation.
Also many more like Collateral Swapping, Efficient liquidity management e.t.c
zkLend is backed by many investors like Delphi Digital, Alameda Research, Metacartel Ventures, Amber Group e.t.c
They raised $5M on seed round from Delphi Digital. zkLend already has its token planned, its Native Token will also be the governance token.
Users stake the Token in which they are incentivized for doing so as a result of their staked tokens being used as a hedge against liquidity shortfall.
They are incentivized through:
Emission Rewards
Revenue Sharing
Governance rights
zkLend Testnet is currently live for whitelisted participants and also there will be opportunities for non-whitelisted users before mainnet launch which is around Q4 2022, so stick around in the discord.
NB: Possible Airdrop for active users.
IMO, This will definitely be a gamechanger in the StarkNet Ecosystem.
To stay updated with zkLend, Kindly follow them on their Social
Twitter: https://twitter.com/zkLend?s=20
Website: https://zklend.com/
Telegram: https://t.me/zkLendAnnouncements
Discord: https://discord.gg/zklend