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Sodium Fi

• They are looking to raise funds & launching next week

• Please reach out to me if you find them interesting on twitter

• What is Sodium?

• What does Sodium offer?

• How does it work?

• What is the workflow?

• What makes is different?

• Different components of the product

  • Fair Price Engine

  • NFT Collections

  • SOD Tokens

  • Governance

• Closing thoughts & how to get involved

What’s Sodium?

Sodium is the first hybrid liquidity protocol for borrowing & lending your NFTs as collateral.

What does Sodium offer?

• It allows users to get access to a combination of the instant liquidity market and the peer liquidity market for efficient loan fulfillment and high collateral valuation for a wide variety of whitelisted collections.

• In simple words there is an unique automated lending function via which:

  • Lenders earn interest on provided liquidity

  • Borrowers can actually use the NFT to it's full potential

How does it work?

• By combining P2P flexibility with P2Pool efficiency, Sodium enables rapid loan fulfillment and high collateral valuation for a wide number of whitelisted collections.

• Lenders provide liquidity according to their own risk-reward tolerance, while Borrowers can choose the loan offers that best suit their needs

Let’s understand this better with the workflow break down below

What is the workflow?

• To use the protocol, holders of whitelisted NFTs can collateralize their NFTs and take out an ETH loan by issuing a ‘Loan Request’.

• Lenders who provide ETH to a Loan Request are placed, in order, into the Lending Queue. Their place in the queue signifies the amount of risk they are willing to take

• Lenders who don’t wish to manage their funds actively can ideally “stake” them

• The Borrower can partially / fully accept a loan at any time during the Loan Request fulfillment process by choosing the one that fits their preferences

• The Borrower will partially repay / fully repay the loan before the end of the agreed upon period

So, what’s in it for each party? 🤔

Lenders:

• Leverage their NFT expertise and maximize gains by being active in the Peer market

• Based on the collaterals value, they can get to define their own strategy & plan of action

• Stake funds into any existing lending pool based on their strategy & goals

• Initiate, manage and earn via dedicated Liquidity Pools for specific collections

Borrowers:

• Borrow hybrid liquidity against 100+ available collections and get access to instant liquidity

• Get access high LTV offers from the peer liquidity market

• Enjoy the NFT's exclusive utilities during the loan term, e.g. connecting to Twitter PFP, Collab Land and more

• Using Sodium’s unique collateral valuation metric you can get a pricing for your NFT based on traits, rarity & social factor

Creators:

• Can make a liquidity market for their community, encouraging them to hold the assets by allowing them to release liquidity

• It helps to decrease the secondary sell pressure and can help create a long-term sustainability of the project

What’s different about Sodium?

• Wide Number of Whitelisted Collections

• Highest Collateral Valuation Industry-wide

• Innovative Loan Fulfillment Process

Different components of the product

Now let’s learn about the core components of what makes up Sodium

1. Lending AMM

2. Fair Price Engine

3. NFT Collections

4. SOD Tokens

5. Governance

Lending AMM

• Liquidity providers can stake funds into any existing Lending Pools or can initiate the creation of dedicated pools for a specific collection

• When a request meets the requirements for the Pool, the funds will be allocated automatically

• Here’s a liquidity map based on hypothetical pools set by the platform

Fair Price Engine

• It’s sodium’s proprietary, automatic NFT asset price evaluation system with the goal of ensuring that the borrowers LTV ratio is always up to date

• The engine uses machine learning techniques like gradient boosting & deep neural networks to analyse the historical trades and prices of similar assets

• The goal is to continuously estimate the highest price which could be immediately accepted by the market

• Check out this visualisation for the BAYC collection

NFT Collections

• To reduce the risk, only accepted NFT collections would be accepted as collaterals

• A community driven approach would be adopted, where the news collections can be added based on communities votes

SOD Tokens

• They’ll be released once the platform goes live, and will be distributed based on the liquidity mining campaign by the team

• The goal is to achieve the following metrics:

  • Total Value Locked (TVL) growth

  • Increase platform's utilization rate.

• SOD Tokens will be used as a part of the DAO to:

  • create / submit proposals

  • vote on issues to steer the direction of platform

• Distribution of SOD’s

• Circulation supply

  • SOD total supply: 1,000,000,000.

  • 50% given as incentives for lenders and borrowers, released over a period of five years

  • 20% allocated to Angel, Seed and later investors

  • 20% allocated to the team, 12 month cliff, released linearly over 3 years

  • 10% treasury

• SOD Rewards

  • Borrowers & lenders directly become a part of the liquidity mining program

  • Initial rewards will be vested for three months.

  • If a user does not wish to wait that long, they can receive their rewards immediately by taking a 50% exit penalty.

Governance

• Will be following a progressive decentralisation structure by having an eventual goal of becoming a DAO, governed by SOD tokens

• A few cool examples of what the users could get to vote on are:

  • Interest Rate Model

  • The addition of NFT collections

  • Risk parameters for over-collateralization and liquidation

  • Changes to the Liquidity Mining Program to adjust incentives depending on market conditions

  • Improvements to the protocol, such as changes to smart contracts and governance processes

Closing thoughts & how to get involved

• With the recent Bend DAO fiasco, there’s a need for better strategies and principles to make the NFT lending market a safe and smooth ecosystem.

• The team at Sodium has been working hard for the last year to bring this platform to us, am excited for the launch coming up soon (definitely a new territory for me explore into as well)

• You can follow the journey and check them out below:

  • Twitter

  • Discord

  • Website

  • Docs

• They are looking to raise funds - so please reach out to me if you’re interested to connect with the team via Twitter

That’s all fam, I hope it was a great time reading! It’s a new ecosystem for me to venture into, so I hope I was able to justice to it :)

If you liked learning about Sodium please do support me, would mean a lot!

If you’d want to cover any projects/events, or just chat, please feel free to connect with me on Twitter : @darshang_ would love to chat!

If you’ve made it so far, please do share this with your community would mean the world to me :)