Traditional finance (TradFi) has long perfected the art of leveraging assets and using them as collateral to increase capital efficiency and enhanced growth opportunities.
One such example is borrowing against collateral. For example, an investor with a liquid corporate bond or a treasury bond (USTreasuries) can lend against that asset, opening up a new source of funds.
Real estate portfolios also act as excellent collateral. They are often borrowed against, allowing the borrower to purchase further assets and increase growth potential.
Cryptocurrencies and decentralized finance (DeFi) are witnessing massive growth, but the stumbling block is the lack of utility for yield assets. Providing liquidity is a prerequisite to entering and earning from DEFi. Currently, the lack of options for yield assets means liquidity provisioning incentives are sub-optimal.
The incentive to provide liquidity isn't as efficient as it should be. Furthermore, all proof of stake systems require collateral to secure infrastructure. We feel the composability of DEFi assets is key to not only boosting incentives for Liquidity provisioning but could hold the door to bolstering infrastructure for proportionate rewards!
Moving on, the composability of yield assets opens up the doors to numerous use cases including leveraged products, options, re-staking, all which lead to increased capital efficiency and liquidity optimisation.
At Entangle we see this as the number one problem to solve, both within omnichain and intrachain environments. In solving the conundrum, we introduce our native dApp focussed on Liquid Staked Derivatives: Liquid Vaults
Introducing Liquid Vaults
At the base, Entangle is an interoperable liquidity layer, powered by our oracle and customised blockchain. This has allowed us to create a cost efficient environment for our native dApp: Liquid Vaults.
Liquid Vaults utilizes Liquid Staking Derivatives (LSDs) of liquidity provisioning assets to facilitate secure, versatile, and composable cross-chain liquidity at scale. Use can now simply stake their idle LP assets to create compostable LSDs to unlock a number of use cases, such as money market lending, staking to options protocols or restaking to secure infrastructure.
By doing this, Entangle achieves capital efficiency for users and incentivizes sustained liquidity for protocols. The mechanics allowing this include an intriciate suite of mechanisms and smart contracts to allow for this expansion of DEFi
Entangle Oracle and Blockchain Solution
Entangle presents an Oracle Solution hosted alongside our blockchain, enabling data storage on-chain and executing verifiable events as needed, thereby minimizing associated costs. This solution enables simultaneous execution of smart contract automation events across multiple blockchains which is a mandatory requirement for Liquid Vaults.
Furthermore, the Entangle blockchain is a highly specialized, oracle-centric primitive designed exclusively for storing information and validating oracle messages. It integrates an Ethereum Virtual Machine (EVM) module, ensuring a developer-friendly and battle tested environment allowing deployments in solidity.
Yield Strategies and Protocol Bootstrapping
With Liquid Vaults, users can wrap any yield-bearing asset (i.e LP) and create enhanced yield farming strategies. Idle assets such as LPs can be synthesized via Entangle,with the underlying LP compounded and staked for a backed LSD. The LSD can now be deposited into a lending and borrowing protocol to borrow stables rendering the user with enhanced capital efficiency whilst increasing liquidity retention probabilities for partner DEXes. This is just one of the use cases Entangle unlocks!
We have extensive first hand experience with leverage, securitisation and collateralisation of assets within traditional finance. This understanding has shaped our vision and set a precedent for how we need to construct liquidity mechanics in a decentralized fashion. We believe DEFi participants and the provisioners of Liquidity need maximum incentives to enter into the ecosystem. Entangle aims to resolve and optimise just that!