Underlying protocols powering Oh Finance: Aave, BenQi, Banker Joe, Curve
So you have read that Oh Finance operates its strategies under underlying protocols, like Aave, Banker Joe, BenQi, Curve on Avalanche. But what are these exactly?
They are all decentralized lending and borrowing platforms, some have become household names in the crypto space, such as Aave or Curve, and have contributed to the explosion of DeFi in 2020. Decentralized equals to no 3rd party holding your funds: You interact directly with the platforms, everything is managed automatically between your wallet and the systems. The funds are either locked in a smart contract or in your wallet, with nothing else that can prevent you immediately withdrawing your assets. Unless it’s built in the smart contract, like a bonding period for example. Then you have to wait until the end of the period or you are penalized if you withdraw too early.
They also have one other common feature when borrowing: Contrary to the real world, you have to deposit collaterals in the form of a crypto asset, before being allowed to borrow against them. How much you are allowed to borrow, will depend on the rules set by the platform for a particular pool. The interest rates for paying back are typically lower than in the real world for a traditional short term loan.
The popularity of these platforms can be measured with their Total Value Locked. The TVL is the total value of the assets deposited/staked in the respective protocols, they represent the available secured supply.
All the protocols described below benefit from the Avalanche Rush program and/or are directly backed by Ava Labs, the Avalanche foundation.
Aave
Launched in 2017 on Ethereum, one of the biggest lending and borrowing platform with a TVL that peaked in October 2021 to a staggering $20B, compared to around $1B in 2020.
They are on several chains and expanded to Avalanche in October 2021: They have already secured over $3.6B on that network in less than 2 months.
AaveV2 is a decentralized, money market protocol that allows users to lend and borrow tokens on Ethereum. Depositors lend tokens to earn APY from protocol borrowers.
Borrowers can borrow tokens against deposited collateral and pay APY.
Each token has different liquidation and collateral parameters. If the borrower’s loan ever exceeds the required collateral factor, the borrower’s position can be liquidated to maintain protocol solvency. During liquidation, the liquidator repays the borrower’s loan in exchange for a percentage of the borrower’s original position.
Currently, lenders and borrowers passively earn stkAAVE (Staked AAVE) tokens which can be unwrapped into AAVE.
Curve
Launched in 2020 on Ethereum, made a huge splash and followed the same parabolic rise as Aave: TVL of already around $1B in 2020, peaked to almost $22B in November 2021.
Curve is a popular automated market maker (AMM) platform that offers a highly efficient way to exchange tokens while maintaining low fees and low slippage by only accommodating liquidity pools made up of similarly behaving assets. While this approach results in lower fees for the liquidity providers who supply the pools with tokens, Curve incentivizes their participation by integrating with external DeFi protocols and delivering rewards in the form of CRV tokens and interest.
Banker Joe
An offspring of Trader Joe on Avalanche, a DEX that launched in July 2021. The DEX had phenomenal growth to quickly become the biggest one on Avalanche, with a TVL currently at $2.6B.
TraderJoe has branched into the lending and borrowing business in October 2021, under the protocol Banker Joe, which quickly amassed several hundreds of millions in TVL by itself.
Banker Joe is a fork of Compound and Cream.
BenQi
Another young lending/borrowing protocol on Avalanche, launched on August 21st 2021, reaching $1B TVL one week after its launch. The TVL today is at around $1.5B.
BENQI is a non-custodial liquidity market protocol, built on Avalanche. The protocol enables users to effortlessly lend, borrow, and earn interest with their digital assets. Depositors providing liquidity to the protocol may earn passive income, while borrowers are able to borrow in an over-collateralized manner.
About OH! Finance
Oh! Finance is an optimized yield-generation protocol, focused on reducing risk and increasing volume exposure. Start earning industry-leading interest rates on stablecoins in just a few clicks: https://oh.finance
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