How cLEND works
cLEND currently operates by using collateral to issue loans, with a fixed interest accruing over time.
Repayment retrieves the collateral, but excessive interest can result in collateral being burned forever.
Rationale #1 - The Psychology of cLEND
Users face significant mental and emotional barriers when considering cLEND loans. The uncertainty surrounding collateral prices and the potential loss of collateral heightens decision-making complexity. This psychological burden hampers user adoption and engagement.
Rationale #2 - The Economics of cLEND
Currently, cLEND is the primary driver of core burns within the ecosystem. Therefore, enhancing the cLEND suite presents an opportunity to increase core burns.
Proposal - Staking cLEND Collateral
- Market buy DELTA from Treasury.
- Incentivize ACTIVE cLEND positions with DELTA.
- Users would farm DELTA by opening and maintaining cLEND positions.
Impact
- Reduced Perceived Risk: Users would perceive less risk associated with cLEND, as the DELTA rewards would offset potential losses, thereby encouraging greater participation.
- Increased Yield for Treasury: cLEND Farmers would be incentivized to maintain the positions open which increases yield for treasury via interest payments.
- Higher Vested Interruptions: At the 6 month and 12 month marks you could see higher than normal Delta vested interruptions in order to extend cLEND positions which will boost yields while also indirectly market buying core and tightening the supply of tokens.
- Leverage Lending Strategies: Users could see an APY increase in looping cLEND loans, e.g. taking a core loan to take a core loan. This could also mean more cross-platform utility since it will open the door to be used as part of bot leveraged lending strategies.
References
https://defillama.com/yields/loop - leverage lending, find other many projects that give yield to lenders so its a normal thing.
Other ideas
- Combine with stable yield to increase overall yield.
- Could also be tranched from stable yield as a %. so example 15% of stable yield rewards go to clend positions.