The DeFi landscape is currently lacking lending markets that accept derivatives such as liquid staking derivatives (LSDs) and yield-bearing tokens as collateral. This limitation not only hampers the potential of derivative tokens within the DeFi ecosystem, but also puts constraints on DeFi users, hindering their ability to fully utilize and explore the benefits of DeFi’s composability.
Solace is designed to address this void in the market and empower users to harness the potential of derivative tokens.
Solace is the exotic lending protocol. Its primary functions are:
- Boost your yield on ETH, stablecoins and other blue chips
- Deepen the liquidity for an LSD / yield-bearing token of your choice
- Access borrowing against your DeFi positions at better rates.
Solace introduces veTokenomics on a set of markets across Ajna, purposefully created to accept derivatives as collateral for borrowing ETH (or stablecoins). veSGT holders actively vote on specific derivative tokens and direct SGT emission toward them in order to enhance liquidity depth.
By implementing this integration, Solace Protocol leads to:
- Expanded yield opportunities for ETH suppliers
- Reduced borrowing rates for LSD / yield-bearing token holders
- Wider range of yield and risk management strategies that can be employed with LSD/yield-bearing tokens.