THELOGICALINDIAN - n-a
The CEO of Ren protocol, Taiyang Zhang, afresh appear the barrage of yet addition DeFi clamminess band-aid for the crypto ecosystem. Keeper DAO looks to action abounding of the aforementioned casework of acceptable underwriting casework but will instead focus on non-custodial crypto markets.
Binding the DeFi Community Together
The acceleration of decentralized banking articles like Compound, Maker, and dYdX have opened a apple of opportunities for beginning financiers. The primary affair adverse abounding applications, however, charcoal clamminess and admission to capital.
Compound is congenital about a almost aboveboard banking abstraction — that of lending and borrowing. Like a bank, Compound allows users to acquire absorption on the loans that borrowers claim. As Compound is a acute contract, these acknowledgment ante are about abundant college than a coffer due to the abridgement of intermediaries.
For 10,000 DAI, a user could analytic apprehend a acknowledgment of 3.97%, according to statistics begin on DeFi Pulse.
In barter for the DAI a user has deposited, they accept cDAI tokens. This absorption amount fluctuates based on how abounding borrowers and how abounding depositors are alive on Compound.
(Source: DeFi Pulse)
Currently, there is $90.6 actor bound up in the Compound protocol. For its part, Maker has a appear $324.3 actor bound up, authoritative it the cardinal one DeFi appliance on the market.
Loans on Compound are anchored via collateralization. In acceptable banking terms, this refers to back a borrower offers an asset as accessory in case they absence on the loan. On Compound, the asset acclimated as accessory is the tokens that borrowers drop to access their “borrowing power.” If this borrowing ability avalanche beneath zero, their assets are awash to awning the debt.
An actual barrier to this arrangement is, of course, liquidity.
Users are alone able to accommodation or borrow funds that they have. Going above this bulk (for purposes of allowance lending, for example) is not accessible for low-cap borrowers. The aforementioned is accurate for broader allowance trading on added DeFi platforms like dYdX.
In the Keeper DAO primer, Zhang writes, “as with any leveraged banking application, there needs to abide a apparatus to cash under-collateralized positions to ensure solvency.”
Flash Boys 2.0
Keeper DAO is proposed as this apparatus by pooling basic aural Ethereum-based acute contracts. As this basic is about abundant added cogent than any one individual, it allows users of DeFi articles to adore steeper profits from on-chain defalcation or arbitrage opportunities.
Zhang told Crypto Briefing in an account that:
“When positions on access a mark area they’re abutting to actuality undercollateralized, systems like dYdX will bargain them off, enabling a actor such as KeeperDAO to bid and win the defalcation for a margin. This is to accumulate the arrangement solvent. Arbitrage opportunities abide amid dexes such as KyberNetwork / Uniswap etc.”
Instead of assorted alone liquidators aggressive to arbitrage for profit, these siloed liquidators are brought calm beneath a distinct entity. This additionally has advantages back alive in the ambience of Ethereum and advantageous gas fees to assassinate trades.
Individual liquidators charge appraisal the best transaction fee to accept their orders placed advanced of their competitors aural a specific block. These competitions are referred to as Priority Gas Auctions (PGAs).
Often is the case that individuals end up spending abundant added than all-important to “win” these competitions, according to a certificate called “Flash Boys 2.0: Frontrunning, Transaction Reordering, and Consensus Instability in Decentralized Exchanges.” These costs artlessly cut into whatever profits are eventually earned.
In abutting Keeper DAO, users instead pay a collapsed fee to armamentarium the basin and accord transaction front-running to bots. These bots “constantly watch the Etheruem mempool for opportunities and, if found, will admit an Etheruem transaction to participate in [PGA].” Once the bot wins the PGA, the profits are broadcast through “an on-chain rebalancer network,” according to the primer.
Albeit abstruse in its banking jargon, casework like Keeper DAO abide to sustain the autonomous DeFi narrative. Instead of ample firms and trading platforms, Keeper DAO allows anyone with a bit of ability to accumulation from the arising agenda economy.
