⭐️ Stake Fantom, Earn Rewards: https://fantom.foundation/ftm-staking
⭐️ Use FTM to shop on Amazon, eBay, Walmart & Home Depot at https://shopping.io
Description: We build DeFi banking infrastructure. Liquid Staking and Zero-Interest Loans For Fantom Opera. The protocol was created to solve three problems:
1. Currently, it is difficult to take short positions in assets in a decentralized manner. For instance, while you can short ETH futures in multiple centralized exchanges, shorting ETH through smart contracts in a trustless manner is difficult. If short sellers are allowed in the market, the price becomes more stable and reflects better its fundamentals.
2. Most staking options consist of liquidity pools where both impermanent loss and opportunity cost are a concern.
3. Single-staking is frequently costly and illiquid: you must commit a high amount of tokens for a very long amount of time to earn a decent return. Alternative options exist through “algorithmically-pegged” stable coins like TOMB, however the mechanisms that guarantee the peg of such coins are still to be tested over time.
The way we solve the first two problems is by introducing a Vault system where investors that are long can supply liquidity for investors willing to go short. Long investors deposit a single asset in a vault and short sellers can borrow this asset, at no interest cost, by posting collateral in return. Short sellers can then do whatever they would like. Discipline for short sellers is enforced through an withdrawal window: every week, long investors can withdraw the value they provided, either from the vault directly or from the collateral pool. This ensures that short sellers mark-to-market or give back the assets they borrowed every week, during this window. Not doing so risks the collateral pool being depleted by long investors withdrawing all the value borrowers have provided.
Additionally, this vault system solves the staking problem: long investors, by having deposited in the vaults, earn protocol fees. Fees are earned on withdrawals and on liquidations. In that way, through a single-asset deposit, a long investor can earn a return on their assets without impermanent loss and opportunity cost risks.
The third problem is solving by liquid staking: You deposit the token and then you get a receipt of a deposit. This receipt can then be freely traded and used in other protocols. For instance, if you deposit FTM in a $STAKE1 vault, you receive S1FTM in return (the amount of S1FTM you receive is such that it allows you to withdraw at least the same amount you deposited). The S1FTM to FTM ratio is supposed to increase over time as the protocol accrue fees, allowing you to withdraw more FTM than you deposited in the future, absent any catastrophe. Notice that this S1FTM is a fully-backed token, as it is backed by your deposits and the collateral provided by short sellers. Therefore, you do not need to worry about any sort of “peg”: if S1FTM is being traded at less than 1 FTM, just go to the vault and withdraw your funds (as long as the vault is open). The protocol is designed to work as a full-reserve banking system with time deposits in that regard.
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