A collaboration between decentralized finance (DeFi) developers is introducing a non-custodial liquidity market on the second-layer network Base, promising to enable trustless smart contracts to automatically connect liquidity pools with lending strategies.
Behind the initiative are developers from Seashell, RNG Labs, and Loreum Labs, as well as advisors and collaborators from Ampleforth, Uniswap, and other projects. The group built the Seamless Protocol, a fork of Aave v3 that allows smart contracts with predetermined borrowing strategies to conduct undercollateralized borrowing on-chain.
“As an analogy, a borrowing strategy is like a single-purpose loan, such as a home loan, a car loan or a school loan – the provider knows exactly what the liquidity is used for, and the borrower cannot use it for a different purpose,” one Writer Seamless told Cointelegraph, referring to undercollateralized borrowing options.
Very pleased to announce the @SeamlessFi
Seamless is a decentralized, non-custodial liquidity market that is @BuildOnBase
Can’t wait to see where this goes!Learn more about partner announcements https://t.co/Id9eVmDohs
— Seashell (seashell.com Arbitrum Vaults) (@getSeashell) August 29, 2023
Undercollateralized borrowing is nothing new in the cryptocurrency space. Protocols like Maple Finance provide funding to institutional and accredited investors through undercollateralized products. However, this process requires a combination of off-chain and on-chain steps, meaning users seeking funding will negotiate terms with the Maple team before a loan is issued on-chain.
“Many borrowers already know what they are seeking additional liquidity for, so a comprehensive borrowing strategy simply connects these steps together. Because the borrowing strategy is on-chain in a smart contract, liquidity providers have full visibility into how funds are being used ,” the agreement explains its core strategy.
Universal loans, such as personal loans that can be used in a variety of situations, are also integrated into the protocol, but are subject to common DeFi lending rules that require over-collateralization.
Seamless believes its solution is better suited for DeFi than on-chain reputation scores or on-chain identities (such as WorldCoin’s proof of character system). “(…) The only way to create the conditions for under-collateralization is within the orbit of smart contracts to smart contract systems, which brings us back to the basics of crypto and DeFi (trusting code rather than humans),” Seamless contributed The reader said.
Magazine: Recursive Inscription – Bitcoin “Supercomputer” and BTC DeFi Coming Soon
Svlook
