Did you know that only 30% of the funds you put into lending protocols are being utilized to create the yield that you are getting?
The remaining 70% are just there idle not creating any value for anyone. It serves liquidity purposes so that the "others" can exit or borrow more easily.
Does that not sound wasteful? Imagine depositing $10,000 and only being rewarded for $3,000 while your $7,000 is just set aside as a reserve for someone else you have never met before in your life. In the traditional model, your funds will never be close to being fully utilized 100% as a result of the interest rate model, meaning there will always be funds left idle no matter what. Since utilization is a factor for the interest rate model, when the utilization is high, the rate is high, and vice versa.
With NillaConnect, you can rest assure that your funds are being fully utilized 100%. This means that if you deposit $10,000 then the full $10,000 will actually be utilized to create yield. You will actually be rewarded for 100% of your capital that you provided, not just a minority. NillaConnect is designed to maximize the returns to the un-utilized liquidity in the DeFi space by creating new opportunities for this idle liquidity while also assuring that the returns are always higher than existing solutions in the market.
With NillaConnect's P2P leverage optimizer, we help you to utilize the un-utilized to make sure that every bit of your funds are actually working for you and nothing goes to waste.
Our P2P leverage optimizer model ensures:
1. More capital efficient lending and borrowing
With the integrated P2P model, it enables capital to be fully utilized between counterparties while matched. The more capital you put in, the more matches you will get, and vice versa.
2. Better rates for both sides of the market
With a more capital efficient model, borrowers can be sure that they are paying less borrowing rate, while lenders can be sure that they are earning higher supply rates. This is where both parties meet in the middle, tightening the spread to near zero, which creates a win-win situation when both parties are matched. Everything is the same as other lending/borrowing protocols, but we have better rates, and are highly composable with other dApps, hence it's simply better off to use us.
3. Automated liquidity flexibility
If a lender wants to exit, the funds can be withdrawn from the floating reserve. This would affect the ratio of the floating reserve to the LAPM, which will trigger the formula for the interest rate to increase inorder to retain the fixed ratio. Eventually, the liquidity from the positions will be freed up and the lender will receive their funds back safely.
If a borrower wants to borrow, they can borrow immediately with better rates from the LAPM.
LAPM = Liquidity Available for P2P Matching, this term will be used throughout the docs for conciseness.
4. Cross-chain interoperability
Users are able to collateralize and borrow cross-chains to use it as leverage in strategies on any networks they wish.
5. Boost yields with higher leverage
With the focus on mid-to-low risk assets, the APY on those assets are naturally low due to its risk nature. We made the rates more capital efficient with P2P, and users can boost their earnings even more with higher leverage, to ensure that they are extracting more yield from mid-to-low risk single asset strategies.
6. Start earning yield instantly without having to wait to be matched
With our model, if there are no borrowers to be matched, the funds of the suppliers will automatically be deposited into the underlying pool to start earning yield immediately. Though it may be the same inefficient yield as the other places, it ensures that the lowest yield that suppliers can earn are that of the underlying pool, while ensuring the process is the same if not easier - but with NillaConnect, you have a good chance of earning higher yield than that, thus, creating a win-win situation for both parties.