Seamless Protocol Introduces Advanced Borrowing with Integrated Liquidity Market on Lido
Summary:
Seamless Protocol is launching an Integrated Liquidity Market (ILM) on the Lido platform for wrapped staked Ethereum (wstETH), offering advanced borrowing strategies for tokenholders. The ILM, with its automated reinvestment features, intends to optimize user rewards. Compared to traditional restaking, this method introduces more complex investment strategies. Seamless highlights the system's transparency, with on-chain lending catering to various user requirements. The protocol currently holds $41.91 million in total locked value, and faces typical risks such as smart contract vulnerabilities, market volatility, and regulatory issues.
Seamless Protocol is set to launch an Integrated Liquidity Market (ILM) on the Lido platform for covered staked Ethereum (wstETH), providing innovative borrowing solutions for tokenholders looking for alternatives to standard restaking. Seamless reveals that the ILM will empower Lido stakers to utilise a borrowing strategy and compound positions on wstETH auto-reinvesting gains from staked Ether (ETH) optimizing user rewards.
The distinction between this method and restaking lies in the complexity of the investment strategy. According to the protocol, the ILM continually handles user funds, facilitating low-collateral loans as funds stay within the ILMs. Conversely, restaking comprises the re-investment of staked ETH to earn bonus rewards without reliance on cutting-edge automated tactics.
On-chain lending can serve various purposes, catering to traders seeking leverage or liquidity and long-haul investors. Seamless' approach centres on single-purpose loans, where the lender recognizes where the liquidity is allocated, and the borrower can't use it elsewhere. "As Borrowing Strategies are embedded in on-chain smart contracts, Liquidity Suppliers gain complete insights into the fund deployment," the company disclosed to Cointelegraph previously. This strategy carefully weighs risk and allows for lower collateral stipulation. Seamless’ Daryl Hok indicated that strategies are devised and selected by the community before being encoded into smart contracts.
"Seamless is powered by the community, so new ILM strategies and markets can be proposed via governance procedures. Votes on strategies for protocol integration are cast by SEAM governance holders and delegates," he said. The protocol was designed on the Base network and was launched in mid-2023 by developers from Seashell, RNG Labs, and Loreum Labs, including former contributors from platforms like Uniswap, Aave, Ampleforth, and CertiK. As per DefiLlama, Seamless currently has a total locked value (TLV) of $41.91 million, with over $20 million borrowed on-chain since the beginning of the year.
However, Tokenholders involved in staking tokens or participating in DeFi protocols typically face risks, such as security flaws in smart contracts, market turbulence, and regulatory ambiguity.
Published At
3/6/2024 9:00:00 PM
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