The advent of decentralized finance (DeFi) will fundamentally alter the world of financial products and services. Composability, perhaps DeFi’s greatest innovation, will enhance the efficiency and utilization of assets in ways we are only just beginning to understand.
The first wave of DeFi applications allowed users to turn their base assets into interest-bearing ones, whether by lending them in Aave and Compound and receiving interest-bearing aDAI/cDAI, or staking them in Lido and receiving stETH. The second wave will take full advantage of these interest-bearing assets, creating true superfluid collateral via “stacking”.
We’re excited to introduce burrow.cash, an interest rate market protocol built on NEAR that will allow users to supply and borrow interest-bearing assets.
What Burrow Does
- Unlocks yield from the base layer
- Unlocks yield across chains
- Enables self-paying borrows
Unlocking the base layer
It’s increasingly a proof-of-stake world, and base layer rates are the new risk-free rates. Thanks to composability, users do not need to choose between the base layer rate and other DeFi rates.
Staking derivatives like Lido, Marinade, and Metapool are unlocking base layer yield, and allow users to maximize their returns while continuing to provide security to the base layer.
Users can deposit stNEAR, earning ~11% interest per year, and then borrow against it. Over time, we will add more base layer staking derivatives, including stETH, stSOL, stFTM, and more.
- stETH (wrapped)
Unlocking yield across chains
With the explosion of multi-chain protocols like Aave, Sushi, Curve, and the simultaneous explosion of incentives programs and L1 treasuries, yield opportunities are numerous and competitive.
Fortunately for users, they do not actually need to choose between Aave on Ethereum, and XX on NEAR. Thanks to the design of the Rainbow Bridge, users will soon be able to earn yield on Ethereum, BSC, Polygon, and more, while earning yield on NEAR in XX.
The Rainbow Bridge works by locking tokens on the Etheruem/BSC/Polygon side of the bridge, then minting an equivalent number of tokens on the NEAR side. These locked tokens can be used in interest-earning protocols, while their equivalent token is used in XX. These tokens can be recalled atomically when users cross back across the bridge (with interest), presenting minimal risk.
As proven by Alchemix, loans backed by interest-bearing collateral can pay themselves off over time. We believe extending this concept to a generalized lending platform is the next evolution.
Imagine taking out a 100 USDC loan using $1000 worth of stNEAR collateral. Assuming modest price movement (big assumption, to be fair), the loan will pay itself off in less than a year. This is essentially the equivalent of borrowing against your future yield.
We’re targeting a beta launch on mainnet by the end of the month, with a full launch a few weeks after that!
- Testnet: SoonTM
- Beta launch: End October
- Full mainnet: November/December
- BRRR: 🤫