After the Ethereum upgrade is completed, what new opportunities and attractions can we participate in in the LSD track? New stablecoins may be one of them. This article will provide an in-depth introduction to Lybra Protocol, a protocol that generates stablecoins through over-collateralized ETH and can convert deposited ETH into stETH in exchange for earnings.
Introduction to Lybra Finance
Lybra Finance is a DeFi protocol that allows you to deposit ETH and mint the stablecoin eUSD without paying any fees or interest on borrowing. The eUSD held in your account will earn stable interest rates. The protocol is currently on testnet and will launch on the Ethereum mainnet soon.
How Lybra Finance works Lybra Finance works as follows:
Deposit ETH/stETH as collateral into Lybra;
Mint eUSD; you can earn 7.2% on eUSD you hold.
Minted eUSD can also be used in other protocols.
eUSD: The protocol’s stablecoin
eUSD is a stablecoin that is hard-pegged to the U.S. dollar and is over-collateralized by ETH. Simply holding eUSD can generate stable income, with an APY of approximately 7.2%.
How does eUSD earn interest?
Deposited ETH will be automatically converted to stETH through the Lybra protocol. Over time, stETH will continue to grow. The income obtained from stETH will be converted into eUSD, and the income will be distributed to eUSD holders. The current basic APY is 7.2%.
How to ensure the stability of eUSD? Lybra maintains the stability of eUSD in the following three ways, which is also the basic design of most over-collateralized stablecoins today:
Overcollateralization: Each eUSD is collateralized by at least $1.5 worth of stETH.
Liquidation mechanism: If the user's mortgage rate is lower than the safe mortgage rate, any user can voluntarily become a liquidator. They can use the corresponding eUSD to purchase the liquidated portion of the collateralized stETH. This mechanism ensures the stability of eUSD.
Arbitrage Opportunities: Arbitrage opportunities arise when the eUSD price deviates from its $1 anchor price, and users can profit from these price differences.
LBR: the protocol’s native token
LBR is the native token of the Lybra protocol. Users holding stLBR can participate in governance and voting while sharing the benefits of the protocol.
Users can obtain LBR tokens in the following ways:
IDOs participating in Lybra LBR;
Earn rewards by minting eUSD;
Become an eUSD/ETH liquidity provider.
Protocol operating mechanism and user’s role in it
In the Lybra protocol, users can play the following roles:
Minters: Users can borrow eUSD using their ETH or stETH as collateral, earn yield, and repay the debt later. The user's staking rate should be higher than the safe staking rate, which is 160%.
Redemption Providers: Rigid redemption is the process of converting eUSD into ETH at face value, similar to the fact that 1 eUSD is exactly equal to 1 US dollar. Users can exchange their eUSD for ETH at any time with a fee of 0.05%.
Liquidators: Liquidators are the first line of defense in maintaining system viability. By becoming a liquidator, users can use their eUSD to settle the debt of any borrower (Minters) at any time. They maintain the stability and total supply of eUSD.
Keepers: Any third party can run Keepers to monitor the status of each liquidator and minter. When a borrower needs to be liquidated, Keepers can choose to liquidate immediately using eUSD.
Tokenomics
LBR is an ERC-20 governance token with a maximum supply of 1 billion. The distribution of tokens is as follows:
Mining pool: 55%
Partners and Marketing: 10%
Team Development: 10%
Treasury: 15%
IDO: 10%
In summary: Lybra Finance provides users with a stable and efficient DeFi solution through its innovative design and stable revenue model. In the near future, Lybra is expected to become a rising star on the LSD track.