Interest Rate Swaps, Fixed Rate Lending, and Inter-Realm Yield Optimizers
The synergies which emerge out of having Lending and Stableswap products under the same protocol are immense. Bastion’s Hub-and-Spoke Realms model (isolated markets) works perfectly with our Stableswap in enabling interest-rate swaps between like cTokens from different Realms. For example, USDC is currently present in our Main Hub, Aurora Realm, and Multichain Realm. The interest rates, level of liquidity, interest-rate model, and utilisation rates differ among the Realms.
Liquidity on Aurora will be greatly fragmented with multiple wrapped versions of assets and cTokens from different Realms. Our Stableswap unites this liquidity through a smart router, allowing for flash-swaps, 1-click cToken minting, interest rate swap arbitrage, and much more market-efficient interest-rate rebalancing between Realms. Yield optimizers and fixed rate lending can be built on Bastion’s interest rate swapping feature as composable DeFi legos.
Users can seamlessly swap into higher yield positions between like-assets on different Realms. For example, a user may choose to swap from cUSDC [Main Hub] into cUSDC [Aurora Realm] if Main Hub offers lower yield due to TVL dilution. This applies to any token that has a similar price with another asset on a different Realm.
Supercharging Bastion Wars
With the release of veBSTN over the next few weeks, we will start to see the ignition of Bastion wars. Not only will DAOs fight over emissions towards their pools, protocols will also compete to direct BSTN emissions towards their Realms! For example, we will be releasing a Trisolaris LP Token Realm soon. In the future, Trisolaris DAO may vote to buy/bribe BSTN emissions towards the Trisolaris Realm, especially as they also transition to a veToken model. Trisolaris Realm is just the first of many! Bastion has already been approached by multiple projects to build Convex-like derivatives and Redacted-like marketplaces on top, and we expect a flourishing ecosystem to emerge around governance on Aurora.
Seamless Inter-Realm interest rate swaps intensify the competition between DAO Realms as capital redirection becomes more and more fluid.
Yield optimizers can be built on top of Bastion’s interest-rate swaps. This would greatly simplify and automate the UX, allowing a user to deposit into a yield optimizer vault and automatically have their position rebalanced to receive the highest yield for a particular asset across the Realms. This leads to much more market-efficient interest-rate rebalancing, liquidity management, and risk control across Realms.
Fixed Rate Lending
Interest rate swaps enable an entirely new class of DeFi primitives to emerge. Synthetics, yield-principal dual tokens, and seamless rate-conversions make fixed rate lending possible. As institutions continue to flood into DeFi, the predictable yields of fixed rate lending will increase exponentially.
All assets should be cTokens
Lending protocols and Stableswaps in DeFi generally do not focus on cTokens. cTokens (collateral tokens) are the receipt tokens users receive upon depositing into Bastion. cTokens deserve greater usage in DeFi, and Bastion views the adoption and utility of Bastion cTokens as important as BSTN itself.
By listing cTokens on our Stableswap, Bastion aims to make cTokens the foundation of the Aurora ecosystem. This breakthrough in user behaviour will allow Bastion to accumulate significantly greater TVL than any other comparable Lending or Stableswap protocol that exists. Lending (Aave and Benqi) and Stableswap (Curve and Platypus) make up 67% of Avalanche’s TVL! Users shouldn’t have to choose between LP yield or deposit yield. Why not stack them and capture both?
Since Aurora is so new, we have a chance for Bastion to do both. We strive to be the most sustainable, high-yield savings account in all of DeFi. Bastion’s lending product already controls almost 50% of Aurora TVL. There is no protocol on any other ecosystem that dominates both Infinity Stones in the DeFi gauntlet.
Read more about our vision for Bastion Stableswap here: https://bastionprotocol.medium.com/introducing-bastion-stableswap-7a150dea7492
There are so many exciting DeFi legos that can be built on Bastion. If you would like to help build out the Aurora ecosystem, we would love to talk! Please DM us on Twitter.
Bastion is a decentralized lending and borrowing protocol built on Aurora, NEAR’s EVM-compatible layer. Building on Aurora enables Bastion to create an autonomous interest-rate engine with superior capital efficiency, fast transactions, ultra-low transaction fees, precise liquidations, and harness the underlying UX benefits of NEAR.
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DISCLAIMER: This article does not constitute investment advice. Bastion Protocol Token (BSTN) is a means by which users may utilize and govern the protocol. Bastion does not recommend purchasing BSTN for speculative investment purposes. BSTN tokens may lose value or have no value and may have no market. Please read the full disclaimers here.