Let’s see. Unprecedented yields, constantly rising TVLs, and more mature, sophisticated products being constantly launched. If you’re plugged into the DeFi ecosystem, this could well be one of the most exciting times of your life.
Still, if this feels huge now, the real wave is yet to come. Institutions are still waiting on the sidelines, (though we are seeing increasing efforts with CeDeFi) and mainstream users are yet to be onboard.
Based on that conviction, LongHash Ventures has chosen to invest into Idle Finance, a yield aggregation protocol that we believe will be well-positioned to capture a significant slice of the pie and bring the next wave of mainstream users into DeFi.
So you say: Yield aggregators?
A core tenet of DeFi is its permissionless access. The easiest way to understand this in the traditional sense: Imagine if you had access to every savings account available in the world, and could move your funds in and out frictionlessly.
To truly capitalize on this in DeFi, you would need to ensure that your funds are constantly earning you the best possible interest rate, which is exactly what Idle Finance does — pooling together user liquidity and moving them between the different lending protocols depending on their current rates.
One distinguishing feature of Idle Finance as a rebalancing protocol is that funds are also being rebalanced or allocated in the most efficient way to provide the best yield.
This avoids a “ping-pong” effect where for instance, the current yield on USDC offered at Aave drops below that of Compound as a result of Idle Finance’s significant volume being deployed into Aave. Funds would then have to be shifted again, possibly leading to the same outcome.
With Idle Finance, the utilization rates of the various lending protocols are taken into account as each pool of funds is allocated between them such that as a user, you can rest assured that you’re getting the best yield possible.
Yield optimization will continue to be a much-needed primitive in DeFi, and no matter how many new DeFi protocols arise, the best aggregators like Idle Finance will be here to stay.
The user experience: Keeping it simple
We expect that the next wave of mainstream users dipping their toes into DeFi won’t be the ones who are diving deep into every new yield farming opportunity available but will be those who are simply looking for a way to beat inflation, especially as interest rates are at historic lows. And yet, an often overlooked aspect of DeFi is the challenging user experience and steep learning curve for beginners.
Idle Finance is well-positioned to take advantage of that and be the entry point for DeFi for such users. Just as how robo-advisors have gained popularity in recent years due to their low barriers into investment, DeFi protocols should also be simpler, without requiring users to personally choose and jump between protocols.
On Idle Finance, with just a couple of clicks in a simple interface, a DeFi beginner can easily deploy their available funds into a pool and watch as their interest grows over time.
Come for the yield, stay for the security
In the unrelenting chase for yield, projects and users sometimes compromise on the key element of security. What we particularly like about Idle Finance is their focus on reliability and security.
When liquidity mining exploded in the summer of 2020 and many projects fast-tracked the launch of their liquidity mining mechanisms, Idle Finance chose to double down on their security efforts instead. This meant going through multiple extensive audits (Quantstamp themselves are also an investor) and rolling out their platform in stages, as opposed to launching a token first and putting their users at risk.
This security-first approach is also reflected in its products, with alternative risk-adjusted strategies offered, providing risk-averse users with the option to deploy their funds into less risky protocols.
When B2B integrators are looking for a DeFi protocol to deploy their users’ funds into, their top priority wouldn’t be chasing the highest yield, but integrating the protocol with the best security and practices.
Life in the Idle (Finance) lane
If you’re reading this and need a sign to jump on the DeFi bandwagon, let this be it. In a short period of time, Idle Finance has already:
- Achieved a peak of >$200M total value locked (TVL)
- Implemented a Smart Treasury and other cool features like batch deposits
- Integrated with other leading DeFi protocols such as Harvest and Yearn
As a protocol that optimizes for the best yield, simplifies the user experience, and takes on a security-first approach, Idle Finance can be your entry into DeFi, helping you ensure that your valuable funds are never kept idle. Take the opportunity to learn more by visiting https://idle.finance/.
About LongHash Ventures
LongHash Ventures is a Web 3 investment fund and accelerator collaborating with founders to build their Web 3 model and tap into the vast potential of Asia. In January 2021, we launched a DeFi-focused fund and invested in projects such as Balancer, Acala, Instadapp, and Zapper. We collaborated with their founders to develop their tokenomics, governance, and communities through Asia DeFi Network.
With our LongHashX Accelerator, we have partnered with Polkadot and Filecoin to build more than 40 global Web 3 projects which have raised more than $100m in the past 3 years. Through such investments and active collaboration, we are committed to realising our mission of catalyzing growth for the next generation of the Web.
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