Clarity

One pager

Inspiration

To achieve the highest net APY, we considered approaches such as creating a new lending protocol with a new design but ultimately decided that this would be difficult to use due to the complexity of the design, and could lead to further liquidity fragmentation, so we decided to think about how to leverage best the opportunities that already exist in the market. We go beyond mere aggregation of different options, we enable something that was not possible before, taking a modular approach to lending and borrowing, where the desired yield source on collateral and loan platform with desired rates could be mixed and matched, cross-protocol, cross-chain to let users achieve the best net APY possible - if the net APY is positive, it means the loan position is profitable, which could be used for short, long, hedge position or simply for leveraged yield farming.

What it does

Project Clarity enhances the DeFi ecosystem by optimizing cross-chain functionalities, focusing on maximizing user benefits in lending and borrowing strategies. Clarity leverages the dynamics of pool-based lending protocols, like Aave and Compound, where the interest earned on deposited collateral can offset the interest paid on loans.

Our approach ensures users attain the highest net Annual Percentage Yield (APY) by allowing users to deposit collateral at the yield source with the highest deposit rate and borrow from the lending protocol with the lowest available borrow rate across all chains. For instance, if Yearn on zkEVM offers the best deposit rate for ETH and Compound on Avalanche has the lowest borrow rate for USDC, users can benefit from both.

Moreover, Project Clarity extends beyond cross-protocol to cross-chain interest rate arbitrage, exposing users' loan positions to the most advantageous rates across multiple chains. From an ecosystem perspective, Clarity addresses the imbalance in underutilized and overutilized pools, distributing and stabilizing them for overall ecosystem growth. At the same time, it ensures users always have access to the best net APY options, literally, the best. ( As users can mix and match the highest deposit rate available across all chains, with the lowest borrow rate available across all chains )

How we built it

'CCIP' handles cross-chain communication 'Connector' handles yield source and lending protocol integrations Please refer to the GitHub attached below for detailed architecture.

Challenges we ran into

Although we did not prepare a frontend for this version of Clarity, we have put a lot of effort into the user experience in the technical architecture, as most of the heavy users in defi directly interact with defi protocols with their contract of customized strategy. However, with or without an interface, all that users have to choose is 1) Select collateral asset 2) Choose which yield source to deposit their collateral 3) Select which asset to borrow 4) Select where to borrow from -> Then they get the loan position with the highest net APY that would have not been achievable without Clarity.

Accomplishments that we're proud of

We're most proud that we came up with a solution with a completely new approach to achieving a Net APY that was never possible before, and users could achieve the highest net APY than they would have on any other lending protocols.

What we learned

A good solution may not always be to design something new and difficult. Sometimes a good solution is just reassembling something that already exists.