In this article, Holdstation will introduce a platform that can optimize the amount of held $ETH while providing leverage on the $ETH position without incurring funding fees, borrowing fees, and more.
What is Lybra Finance?
Lybra Finance is a CDP (Collateralized Debt Positions) platform that allows users to collateralize their ETH/stETH to mint the platform's stablecoin.
The unique aspect of Lybra compared to other platforms is that users can mint eUSD without incurring any fees, including borrowing fees.
Additionally, eUSD is a yield-bearing asset, meaning that by holding this stablecoin, users can earn passive income paid in the platform's inflationary token.
Mechanism
Users collateralize ETH/stETH on the platform and mint eUSD in overcollateralized (at 150% or higher) without incurring any fees. They can then use eUSD to purchase additional ETH for leverage or simply hold it in their wallets to receive the platform's inflationary token, esLBR. In simple terms, it is a form of negative-interest loans.
To put it simply, you collateralize $ETH and borrow eUSD at >150% collateralization ratio (1$ eUSD is backed by 1.5$ ETH) with zero fees. All deposited $ETH will automatically convert to stETH, generating interest. The interest from stETH is harvested and used to buy eUSD to distribute to eUSD holders through a rebase mechanism.
This mechamisn make benefits for:
- Retailers who want to go long on $ETH with zero funding fees.
- Those seeking passive income from their held $ETH.
eUSD Peg-Keeper
To maintain eUSD stability around $1, the platform proposes a price pegging mechanism while creating abitrage opportunities for platform users. By allowing a conversion rate of 1$ eUSD = 1$ ETH.
If eUSD < $1
Users can buy eUSD on the open market and redeem it for $1 worth of ETH on the Lybra platform.
For example, if eUSD depegs to $0.9, users can buy $1000 eUSD with $900 and redeem it on Lybra for $1000 worth of ETH, resulting in a $100 profit.
If eUSD > $1
Users can collateralize ETH to borrow eUSD and sell it for other stablecoins.
For example, if eUSD is $1.1, users can collateralize $2000 worth of ETH to borrow $1000 eUSD and sell it on the open market for $1100 USDC. When eUSD returns to $1, they can convert it back to eUSD and capitalize on the $100 profit.
Redemption Provider
To meet the user's demand for eUSD redemption when eUSD deviates from the pegged price, Lybra encourages users to utilize their stETH collateral to provide the price pegging mechanism and receive the following benefits:
- Receive a 0.5% fee from user's redemption conversion.
- Lower liquidation threshold for Rigid Redemption.
- Receive an additional 20% bonus from esLBR.
Tokenomic
Lybra (LBR) token is the governance token of the Lybra Protocol, encompassing features such as staking, governance, and rewards.
LBR is an ERC-20 token with a maximum supply of 100,000,000 $LBR, allocated as follows
Features of $LBR
- Governance: When users stake $LBR and receive $esLBR in return, they gain the ability to participate in governing platform changes, including decisions related to the Treasury.
- Platform Revenue Sharing: Holders of $esLBR tokens are rewarded with 100% of the platform's generated revenue.
- Rewards: $esLBR is also used for incentivizing users to borrow funds, provide eUSD liquidity, and participate in Rigid Redemption.
$esLBR
It holds equivalent value to $LBR and is obtained through platform participation and liquidity provision. Users can stake $LBR for $esLBR to receive 100% of the platform's revenue.
Alternatively, users can participate in a 30-day vesting period to convert $esLBR back to $LBR at a 1:1 ratio.
Summary
With its inflationary mechanism incentivizing users and the innovative yield-bearing stablecoin, it is not surprising that funds are flowing into Lybra. However, the current inflation rate is relatively high. Without proper adjustments, Lybra may risk losing market share to competitors like Gravita Protocol, Raft Finance, and others.
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Disclaimer:
The information, statements and conjecture contained in this article, including opinions expressed, are based on information sources that Holdstation believes those are reliable. The opinions expressed in this article are personal opinions expressed after careful consideration and based on the best information we have at the writing's time. This article is not and should not be explained as an offer or solicitation to buy/sell any tokens/NFTs.
Holdstation is not responsible for any direct or indirect losses arising from the use of this article content.
