WHAT IS INTEREST PROTOCOL

Summary

Interest Protocol allows decentralized exchange liquidity providers to borrow a stablecoin, at no cost.

What is the Interest Protocol?

Interest Protocol is a non-custodial trading and lending solution built around Dinero, a stablecoin.

Main problem?

Liquidity providers have limited financing options to use their LP tokens as collateral. This is a lot of illiquid capital, when one considers the TVL of major protocols like Uniswap, PancakeSwap, Biswap, and many others. Therefore, they often incur impermanent losses and abdicate their rewards to meet short-term financial needs. The Binance launchpool events are a perfect example. Imagine you have 10,000 USD worth of LP tokens on PancakeSwap, and you have no BNB. Your only option is to incur an impermanent loss to remove your LP tokens to swap the underlying tokens for BNB to join the launchpool. During this period, you are losing farming rewards, and you are exposed to BNB’s market risk. Once the launchpool finishes, BNB’s price might be comparatively lower than the tokens you need to rebuild your LP tokens.

How will we solve this problem?

On Interest Protocol, liquidity providers will be able to use their LP tokens as collateral to borrow a stablecoin, Dinero. During the loan, their collateral is accruing rewards.

This service will be available for LP tokens obtained via the Interest Protocol DEX, and over time we will include LP tokens from PancakeSwap and Biswap. The advantage of using LP tokens from the Interest Protocol DEX is to enjoy a 0% interest rate when borrowing Dinero.

How does it work?

Decentralized exchange

The Interest Protocol DEX provides two types of markets: volatile and stable. Volatile markets are designed to support uncorrelated assets such as BNB and BTC; while stable markets are designed to support correlated assets such as BUSD and USDC.

Users can start earning trading fees by supplying liquidity to a market. For example, users can deposit BNB and BTC to the BNB/BTC market to receive BNB/BTC LP tokens. These are yield-generating tokens, which accrue trading fees by simply holding them. As an extra incentive for supporting the protocol and to offset impermanent losses, users can deposit their LP tokens in a farm to start earning IPX tokens, the governance token of Interest Protocol.

Dinero Lending Market

Users who wish to obtain extra capital while supplying liquidity to our DEX, can use their LPs as collateral in the Dinero Markets.

After obtaining the LP tokens, the user can use them as collateral to borrow the stablecoin Dinero. The lending contract will take custody of the LP tokens and deposit them on a farm. Therefore, Dinero borrowers do not lose any rewards while borrowing!

For instance, if a user wishes to borrow 5000 DNR, he/she needs to deposit LP tokens with a minimum value of 10.000 USD as collateral, assuming that the market has an LTV of 50% (Loan to Value). This service has no fees for LP tokens from Interest Protocol DEX.

Vaults

The Dinero LP vault on Interest Protocol allows users to farm stable pairs with 2x leverage, no liquidation risk, and negligible impermanent loss. Stable pairs are markets composed of stablecoins.

When a user deposits USDC, the vault will mint an equivalent amount in DNR and supply the tokens to the USDC/DNR market and deposit the newly obtained LP tokens on a farm. For example, if a user deposits 500 USDC, he ends up with a 1000 USD position of USDC/DNR farming IPX and earning trading fees. Additional vaults will be developed to allow Interest Protocol users to maximize their profits with one click.

Why Interest Protocol?

Secure lending markets for LP tokens without sacrificing profits

Free stablecoin loans

DEX with low slippage and trading costs

High yield stablecoin strategies through our vaults.

We believe that Interest Protocol will bring a new way of making money to the DeFi space through credit and passive income solutions