What is Sturdy Finance?
Sturdy Finance Mechanics
Sturdy 1.0 and Features
Sturdy is a new kind of DeFi lending protocol for interest-free borrowing and high-yield lending. But before discussing how Sturdy Finance makes this possible and why it is unique, let's first take a look at how conventional lending platforms work.
As demonstrated in the image below, lenders deposit assets on which they want to earn interest, while borrowers supply collateral and get the assets deposited by lenders as a loan. Later, the borrower pays back the loan along with the interest to the protocol and gets his collateral back.
On existing lending protocols, the interest earned by lenders comes from borrowers, whereas yields in Sturdy come from the borrowers' collateral! but how?
As shown in the illustration below, when a borrower deposits collateral in order to take a loan, Sturdy takes the collateral and converts it to interest-bearing tokens(ibTokens) on Lido or Yearn. These ibTokens accumulate yield over time, and the yield from these tokens is then distributed to lenders in the same token they deposited.
As a result, lenders can earn high stablecoin returns while borrowers receive interest-free or close to 0% loans, creating a win-win situation.
Let's look at some of the important aspects that make Sturdy Finance appealing to both lenders and borrowers.
No extra fees - only gas fees
Close to 0% interest rates
High, stable yields in comparison to market-determined interest rates
Daily harvested collateral yields
In addition to the features listed above, the Sturdy Finance team plans to release Sturdy 1.0, which will include a complete redesign of the User Interface (UI) to enhance user experience, support new assets, and enhance security with third-party auditing (from Quantstamp).
You can now collect my article for 0.005ETH to support me while also interacting with the Mirror and Optimism protocols. Thanks for your support! 😊
What is Sturdy Finance?
Sturdy Finance Mechanics
Sturdy 1.0 and Features
Sturdy is a new kind of DeFi lending protocol for interest-free borrowing and high-yield lending. But before discussing how Sturdy Finance makes this possible and why it is unique, let's first take a look at how conventional lending platforms work.
As demonstrated in the image below, lenders deposit assets on which they want to earn interest, while borrowers supply collateral and get the assets deposited by lenders as a loan. Later, the borrower pays back the loan along with the interest to the protocol and gets his collateral back.
On existing lending protocols, the interest earned by lenders comes from borrowers, whereas yields in Sturdy come from the borrowers' collateral! but how?
As shown in the illustration below, when a borrower deposits collateral in order to take a loan, Sturdy takes the collateral and converts it to interest-bearing tokens(ibTokens) on Lido or Yearn. These ibTokens accumulate yield over time, and the yield from these tokens is then distributed to lenders in the same token they deposited.
As a result, lenders can earn high stablecoin returns while borrowers receive interest-free or close to 0% loans, creating a win-win situation.
Let's look at some of the important aspects that make Sturdy Finance appealing to both lenders and borrowers.
No extra fees - only gas fees
Close to 0% interest rates
High, stable yields in comparison to market-determined interest rates
Daily harvested collateral yields
In addition to the features listed above, the Sturdy Finance team plans to release Sturdy 1.0, which will include a complete redesign of the User Interface (UI) to enhance user experience, support new assets, and enhance security with third-party auditing (from Quantstamp).
You can now collect my article for 0.005ETH to support me while also interacting with the Mirror and Optimism protocols. Thanks for your support! 😊
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Lifelong learner wandering around #web3, #DeFi, and many more :)
Lifelong learner wandering around #web3, #DeFi, and many more :)
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