daMM Lending Platform Brings Transparency to Institutional DeFi

DAMM Finance’s on-chain lending platform launched today, providing decentralized, capital-efficient and transparent lending and borrowing to institutional investors.

decentralized economy (DeFiJosh Becker, CEO of DAMM Finance, said the platform arose out of frustration with the current options available to investors. Decrypt. “daMM is the protocol we wish we had,” he said.

daMM is an all tokens unsecured lending platform, with algorithmically defined interest rates. It enables market makers and investors to borrow dAMM from any token with a liquidity pool on the platform, allowing them to trade via centralized and decentralized trading venues.

It aims to provide a decentralized platform for fee-free borrowing and lending of unstable crypto assets that are capital-efficient and accessible for multiple token issuances.

To ensure transparency and stability, only trusted institutions can participate as borrowers, while the platform offers high and sustainable interest rates on the liquidity/lending side. Interest rates are determined mathematically by supply and demand, while loans on the protocol can be requested immediately and borrowed for long periods, eliminating time-bound deals at fixed interest rates.

“Perfect solution”

Baker said Decrypt That dAMM is a “perfect solution to two problems we encountered,” as the founder of the Market Neutral Market Maker System 9.

First, make it clear that the majority of current institutional lending platforms only lend cross-chain stablecoins. On the other hand, daMM aims to enable institutions to borrow and lend as many tokens as possible. “One of the big advantages we have is that we include 25 tokens on day one, and our goal is 200 within the first year,” he said. “We’re not just getting started Ethereumwe started ribbedoptimism AvalancheAny EVM compatible series is possible.

The second challenge is risk mitigation, a challenge that DMMM is only addressing by lending to market neutral market makers. “In the past five years in cryptocurrency, there hasn’t been a single market maker that has created a public platform or an institutional lending platform,” Becker said. “The only criteria were individual lending to targeted businesses like Three Arrows Capital.”

To ensure that lenders on dAMM know who their peers are, the platform ensures that all addresses are categorized and subject to Know Your Customer (KYC) and Know Your Business (KYB) checks. “We will start publishing all the addresses of all market banks that are borrowing in our documents,” Al Baker said. “You will be able to see every transaction they make, every loan they take, as they transfer all your assets. In each group, you can see exactly who the borrowers are, and who the counterparty is.”

It gives lenders insight into the strategies that market makers are following; Whether they move funds to exchanges, engage in yield farming, or concentrate on decentralized arbitrage strategies. Users can also see how much market makers are allowed to borrow, allowing them to gauge the level of risk that the daAMM and pool delegates are willing to accept for each borrower.

Security for DeFi

The result, Becker explains, is a kind of “hybrid decentralized” model that addresses some of DeFi’s shortcomings. “Things like Three Arrows Capital no longer happen in TradFi, because TradFi has prime brokers that basically monitor your risk 24/7,” Becker said. “If you come close to losing their influence, they will liquidate you in a second. There is no such thing in cryptography.”

He added that it is unlikely that lenders will be able to give the targeted trading firms leverage in cryptocurrency “until a proper prime broker is built in.” This in turn means that the only people who can lend with less than any degree of security are market-neutral guarantors; Something daMM strives to achieve while expanding the range of assets that can be loaned to it.

Future plans include risk management tools that will allow users to determine the percentage of their loans that will go to under- or over-secured lending. “I think what would be a huge advance in cryptocurrency is the ability to choose your risk parameters in this way,” Becker said, adding that he hopes DAMM Finance will help it become “the largest crypto lending platform.”

daMM is an institutional lending platform for all tokens at computationally determined interest rates. Token issuers with a liquidity pool on the dAMM funding platform, market makers and investors can borrow on the platform to provide liquidity and trade across all central and decentralized trading venues.

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