Overview
The Avatr protocol empowers users to obtain self-repaying loans with no interest and no liquidation risk, utilizing LSD (Liquid Staking Derivative) tokens as collateral.
Initially, the protocol will support LSD tokens, but its design aims for scalability and universality, enabling the use of any yield-generating asset as collateral for issuing loans in the future.
With Avatr, you can simply lock your LSD tokens in the protocol, which will issue you synthetic tokens that can be freely traded on the market, providing you with instant liquidity.
There’s no need to worry about repaying the loan, as it will be paid off using the rewards earned on it. If you prefer, you can also early unstake by paying back the remaining loan — it’s that straightforward.
You may be curious about the specifics of the protocol, such as:
How does the protocol work exactly?
How does it generate revenue?
What is the target market size for the product?
What is its potential for growth?
These are important questions to consider when evaluating the value and future potential of the Avatr protocol.
How does it work?
Obtaining Loans:
- Users have the option to deposit either an LSD token (e.g., stETH, rETH) or Ether (which will be converted to an LSD token).
- During the deposit process, users specify the loan amount they wish to borrow, up to 50% of their deposit.
- The protocol then creates synthetic tokens and transfers them to the user, allowing for open market trading.
- Additionally, users can opt to receive the loan at an alternative address (a key use-case that will be elaborated on in a subsequent article).
- Users can then sit back and watch as their loan is gradually repaid over time.
Loan Management
After depositing collateral, the user’s assets are utilized to repay the loan. Nevertheless, users have multiple options for managing their loan:
- Wait for the loan to be repaid automatically by the deposited assets and then withdraw the collateral.
- Choose to repay the loan early using synthetic assets, ETH, or LSD tokens.
- Opt to liquidate the loan and withdraw any remaining assets.
These options provide users with the flexibility to manage their loans according to their financial strategies and needs.
How avatrETH maintains its peg?
Staking incentive:
A portion of the fees generated by the protocol will be allocated to establishing robust liquidity for avatrETH/stETH. While it is evident that liquidity providers will receive rewards, the choice of the underlying protocol for liquidity is still under consideration.
Currently, the following options are being explored:
- Utilizing pools in Curve.
- Employing Uniswap v3 liquidity pools and managing them with a manager, such as Defiedge, Unipilot, Gamma, etc.
- Leveraging pools in Velodrome and offering bribes for our pool.
All the mentioned protocols present viable solutions for creating deep liquidity. A comprehensive report outlining the advantages and disadvantages of each option will be prepared to facilitate informed discussions within the community. Subsequently, community members will be able to vote on their preferred choice.
Early Debt Settlement:
Users can take advantage of arbitrage opportunities to settle their debt at any time using avatrETH, stETH, or ETH.
For instance, if Bob has an outstanding debt of 10 stETH within the system and observes that avatrETH is trading at a discount in the market, he could capitalize on this situation by purchasing 10 avatrETH at a lower price to repay his debt, as the protocol always deems them equal in value.
This strategy would save Bob money, and his acquisition of avatrETH would help restore its peg. On the other hand, if avatrETH is trading above its peg, Bob could sell his avatrETH for stETH or ETH, enabling him to repay his debt at a reduced cost.
This is the first article of the series explaining the AVATR Protocol, in the next article, we will discuss the use cases of the protocol.
About Avatr Protocol
Avatr is a revolutionary brand on deploying innovative DeFi products on Ethereum. The Avatr LSD Protocol will enable interest-free, self-repaying loans with no liquidation risk, using #LSD tokens #stETH #rETH #frxETH as collateral and supporting future expansion to other yield-generating assets.
Avatr’s Mainnet will launch in April, and they will release more details in next days, stay tuned!
Website: www.avatrlsd.com
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