Read Lybra Finance in one article: the new stablecoin agreement on the LSD track

深潮TechFlow

特邀专栏作者

2023-04-14 19:00 (UTC+8)

This article is about 1159 words, reading the full article takes about 2 minutes

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Would it be a good design to generate interest in derivatives?

Compilation of the original text: Deep Tide TechFlow

After the Ethereum upgrade is completed, what new opportunities and highlights can LSD track participate in? New stablecoins may be one of them.

Lybra Protocol, an agreement to generate stable coins by overcollateralizing ETH, and can convert the deposited ETH into stETH in exchange for income.

At the same time, its stability is ensured through over-collateralization, liquidation mechanism and arbitrage opportunities. There is also a native token, LBR, used for governance and voting.

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Introduction to Lybra Finance

Lybra Finance is a DeFi protocol that allows you to deposit ETH and mint the stablecoin eUSD without paying any fees or interest on lending. The eUSD held in your account will receive a stable interest rate income.

The protocol is currently on testnet and will launch on the Ethereum mainnet shortly.

Testnet link: https://beta.lybra.finance/

Lybra Finance works as follows:

1. Deposit ETH/stETH into Lybra as collateral;

2. Mint eUSD;

3. Holding eUSD can get 7.2% return.

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eUSD: The protocol's stablecoin

eUSD is a stablecoin hard-pegged to the U.S. dollar that is over-collateralized with ETH. Just holding eUSD can generate steady income with an APY of about 7.2%.

How does eUSD generate interest?

The deposited ETH will be automatically converted to stETH through the Lybra protocol. Over time, stETH will continue to grow. Earnings from stETH are converted to eUSD. Proceeds will be distributed to eUSD holders, and the current base APY is 7.2%.

So, how to ensure the stability of eUSD?

Lybra maintains the stability of eUSD in the following three ways, which is also the basic design of most over-collateralized stablecoins at present:

1. Overcollateralization;

2. Liquidation mechanism;

3. Arbitrage opportunities.

overcollateralized

Each eUSD is backed by at least $1.5 worth of stETH.

liquidation mechanism

If the user's mortgage rate is lower than the safe mortgage rate, any user can voluntarily become a liquidator (Liquidator). They can use the corresponding eUSD to buy the liquidated portion of the mortgaged stETH. This mechanism ensures the stability of eUSD.

arbitrage opportunity

When the price of eUSD deviates from its anchor price of $1, arbitrage opportunities arise, and users can profit from these price differences.

LBR: the native token of the protocol

LBR is the native token of the Lybra protocol. Users holding stLBR can participate in governance and voting, while sharing the benefits of the protocol.

Users can obtain LBR tokens in the following ways:

Participate in the IDO of Lybra LBR;
Earn rewards by minting eUSD;
Become an eUSD / ETH liquidity provider.

In the Lybra protocol, users can play the following roles:

Minters;
Redemption Providers;
Liquidators;
Keepers。

Founder

Users can borrow eUSD using their ETH or stEth as collateral, earn yield, and pay down the debt at a later date. The user's collateralization ratio should be higher than the security collateralization ratio, which is 160%.

rigid redemption

Rigid redemption is the process of converting eUSD to ETH at face value, similar to 1 eUSD being exactly equal to 1 US dollar. Users can swap their eUSD for ETH at any time for a 0.05% fee.

liquidator

Liquidators are the first line of defense in maintaining the viability of the system. By becoming a liquidator, users can use their eUSD to settle the debt of any borrower (Minters) at any time. They maintain the stability and total supply of eUSD.