Inspiration
- Low liquidity utilization First-generation lending protocols had only one way to utilize liquidity: deposit collateral and borrow only as much as the value of the collateral. As a result, users did not have many options, but to mainly borrow stable assets(USDT, USDC, etc). Other assets used as collateral are rarely utilized within the protocol.
Due to this low liquidity utilization, the protocols could only offer low-interest rates. This becomes even more critical in the current era of high interest rates across the globe. Users may find it more profitable to return to the traditional finance to deposit their assets, making it more difficult for the protocols to maintain stable TVL (Total Value Locked).
Token value boost failure Most lending protocols excessively distributed their tokens to users as incentives without making meaningful utility, leading to a decline in token price. They attracted users by using incentive tokens to increase deposit interest rates and decrease borrowing interest rates. However, they failed in providing attractive utility of the tokens. This discouraged users to keep their incentive tokens, dumping in the market. The repeated cycle led to a continuous decline in the token prices.
Fragmented liquidity Currently, DeFi liquidity is fragmented across different chains. This is the main reason for many inconveniences and limitations in the industry: different interest rates for the same asset on different chains, assets being deposited or borrowed only on the same chain. These issues are the primary cause of the worst UX, refraining the onboarding of Web 2 users and causing inconvenience even for Web3 users familiar with DeFi.
These issues are the homework that the next generation of lending protocols must address. Innovative approaches are needed to ensure higher profitability, stability, and to enhance the user experience.
What it does
DECAKE is designed to address the problems of the first-generation lending protocols. It deploys lending protocols without depending on a single chain, connecting liquidity across multiple chains. It also maximizes liquidity utilization through various functions such as up to 10x leveraged borrowing and long/short position investments.
An ecosystem focused on:
- Maximizing the utilization of liquidity to provide satisfactory returns to depositors.
- Use cases with real utility for the future and longevity of DeFi (seamless cross-chain borrowing within minutes)
- True governance with fully implemented Discourse Discussion Boards and Snapshot voting
How we built it
Designing and developing the next-generation lending protocol is undoubtedly an exciting endeavor, but it demands a significant amount of time and resources. Therefore, rather than starting from scratch, we decided to focus on showcasing our technical expertise and UI/UX implementation capabilities. As a result, we developed an MVP version of the lending protocol based on the Compound protocol.
This MVP version may actually be more familiar to users, and we plan to release this version first to gather users. After completing investment rounds, we will then proceed with the development of the next-generation lending protocol, aiming to migrate these users to it when it's ready.
What's next for Decake
Apart from the fundamental deposit and loan functionalities like Tokonomics and Soft Liquidation, there are still some exciting enhancements in the roadmap. Moreover, we are gearing up for an assertive marketing campaign prior to the launch to ensure robust initial liquidity.
Docs : https://docs.decake.xyz/
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