Smoke Protocol is an innovative DeFi lending and borrowing platform tailored for the Optimism token ecosystem. It uniquely integrates NFTs as collateral, allowing NFT collectors to leverage their digital assets for financial gains. The platform utilizes Chainlink's Cross-Chain Interoperability Protocol (CCIP) to enable cross-chain functionalities, allowing users to deposit NFTs from different blockchains such as Polygon. With Chainlink's on-chain NFT Price Feed, Smoke Protocol ensures real-time, accurate valuation of NFTs, providing users with a dynamic borrowing power based on their NFT's current market value. Users can deposit and withdraw NFTs seamlessly, using them as collateral to borrow Optimism tokens. Additionally, Optimism token holders can supply liquidity to the protocol, earning interest and contributing to a robust, community-driven ecosystem. In scenarios where the NFT's value falls below a certain threshold, the protocol initiates an auction to protect the platform's financial stability, ensuring the defaulter retains some borrowing power by crediting the surplus from the sale after debt clearance.
- Liquidity for NFT Holders: It transforms illiquid NFTs into viable collateral, granting holders immediate liquidity without selling their assets.
- Cross-Chain Asset Utilization: Leveraging Chainlink's CCIP, the platform enables the use of NFTs across different blockchains, enhancing accessibility and utility.
- Dynamic Borrowing Power: Unlike static lending models, Smoke Protocol offers borrowing power adjusted in real-time to the market value of NFTs, promoting optimal asset utilization.
- Income Opportunities: Optimism token holders can supply liquidity, earning passive income and bolstering the platform's liquidity and stability.
- Risk Mitigation: An automatic auction mechanism for loans falling below collateral value minimizes risks, ensuring platform integrity and providing a recovery path for borrowers.
By addressing these pain points, Smoke Protocol not only enhances liquidity and capital efficiency for users but also nurtures a comprehensive, community-focused ecosystem.
