Unlocking the Full Potential of DeFi
So far we have only encountered loans based on your crypto deposit. As a rule, with these loans your collateral exceeds the loan’s value. Well known example is Maker with a ratio of 170%.
For a $100 loan, you need to deposit $170 in collateral, and even then, the system can liquidate you in the event of extreme price drops.
DeltaPrime – undercollateralized crypto loans
DeltaPrime solves this problem. DeltaPrime is a new decentralized platform for borrowing and investing cryptocurrencies. DeltaPrime is built on the Avalanche blockchain. The platform allows you to take up to 500% of the loan on your deposit.
On your $100 invested, the platform will grant you up to $500. You can use that money for staking, swapping, or some other profit-making actions. The DeltaPrime team raised $300,000 from Ava Labs to create the current version of their app; and is entering a new round of raising money to ensure further development.
How does DeltaPrime work?
Each time you put a deposit in DeltaPrime, the protocol creates a dedicated smart contract that acts as your personal safebox where you can perform various activities; swap, stake, etc. However, there is one important limitation – you cannot withdraw borrowed money from your account.
Everything happens inside the smart contract, and only you have access to it.
You decide where to invest within the platform, what to buy, and which of the integrated protocols you will use. The project is not yet in beta, and just the most basic features are available. The platform runs on the Avalanche blockchain and uses Avax tokens as collateral to obtain a loan. However, you can swap your token on the platform using the integrated DEXs.
Where does the borrowing money come from?
After you have deposited Avax tokens, you can take out a loan up to 5 times more than your deposit, so the question arises as to where the money comes from. The money comes from a pool where users put their money to earn fees.
DeltaPrime uses a decentralized lending pool for liquidity, as do many other DeFi projects, such as Aave for example.
DeltaPrime was launched only recently, and so far, only the basic protocols on the Avalanche blockchain have been integrated, namely Pangolin and Yield Yak which allow users to stake and swap their tokens. The team announced many more integrations and interestingly, they are developing a system that allows easy plug’n’play protocol integration even without anyone’s approval.
Ultimately, it is in every protocol’s interest to increase trading volume or the total value locked (TVL) through integration with DeltaPrime.
Decentralization, DAO, and token
An essential aspect of the whole project is decentralized system management. DeltaPrime is powered by smart contracts and there is no single person or group of people who approves or rejects your loans. Everything works automatically. Users are the sole managers of their smart contracts, and all transactions are public and are traceable on the blockchain. DeltaPrime’s roadmap also includes the launch of DAO, a decentralized organization that will collectively make all future decisions regarding the protocols development. Participation in decision-making and management of the entire system will be rewarded with a token, similarly as it is done in other DAO organizations.
It is essential to point out here that DeltaPrime is one of the few projects in the crypto world that issues a token only after the launch of a fully functional product. DAO and TGE (Token Generation Event) are scheduled for Q4 this year while tokenomics is still being discussed.
There are several important milestones on the roadmap, such as stop-loss function, multichain support, automated strategies, liquidity providing in several different DEXs, etc.
DeltaPrime – Investment strategies
The DeltaPrime platform offers a variety of investing options. I’ll point out a basic approach for hedging your stake
You deposit $100 in Avax tokens, the platform gives you a $400 loan in Avax tokens as well. You swap your $100 deposit within the platform from Avax to USDC to secure it against a price drop of Avax and you stake the entire loan ($400 in Avax) in Yield Yak.
You’re making money as long as your staking APY is higher than your borrowing APY.
You should also calculate the transaction fees.
The advantage of this strategy is that you eliminate the risk of losing your investment because it is in stablecoin, while also earning a staking reward on $400.
The maximum permissible deposit-to-loan ratio is 1: 5, therefore as the price of Avax rises, the ratio may rise over 1: 5, in which case you will need to unstake and sell a portion of Avax to bring the ratio back down below the default 1: 5. As part of automated strategies, all of it will soon be done automatically with the help of smart contracts.
Read more about the strategies here
Two smart contract audits have been made to the platform so far, and a re-audit is planned before the beta launch. Furthermore, future features such as stop-loss and automated strategies will be available. Specialized DeFi insurance providers are being evaluated, according to team members. You should be aware that DeltaPrime uses Redstone as an oracle. Redstone is a decentralized oracle aggregator that collects data from a variety of sources to improve accuracy and dependability.
Each line of DeltaPrime protocol code is visible on their Github,https://github.com/DeltaPrimeLabs/deltaprime-primeloans and details of audits can be found here: https://github.com/DeltaPrimeLabs/deltaprime-primeloans/tree/main/audits
DeltaPrime is a brand-new platform that offers non-collateralized crypto loans with a creative twist. DeltaPrime wants to provide the DeFi space with a significant quantity of additional liquidity.
With all of the upcoming advancements DeltaPrime aspires to become a central spot in the DeFi space. If there are no unexpected delays, they appear to have a bright future ahead of them.