3. Memecoin Staking and Lending
3.1 Memecoin Staking Mechanism
DegenFi has optimized its staking mechanism to allow users to enjoy high yields while minimizing asset risk. The system features the following innovations:
Intelligent Dynamic Yield Staking Traditional fixed-yield staking can be highly sensitive to market volatility, especially given the inherently high volatility of Memecoins. DegenFi employs an intelligent dynamic yield distribution mechanism to ensure stable, sustainable returns:
Base APY + Additional Floating Yield: Users receive a fixed base yield, which adjusts dynamically based on trading fees and lending rates to maintain the health of the liquidity pool.
Here, R0R_0 is the base yield rate, UU is the market utilization rate, and RscaleR_\text{scale} is the expansion factor for market utilization.
Auto-Compounding: Earnings from staking are automatically reinvested, eliminating the need for manual operations and increasing long-term returns.
Gradual Unlock Mechanism: Long-term stakers receive progressively higher rewards, encouraging extended holding and reducing sell pressure.
Liquid Staking For users unwilling to lock up their assets, DegenFi offers a liquid staking solution:
After staking, users receive an equivalent amount of stMemecoin, which they can still trade or use across other DeFi ecosystems, increasing capital efficiency.
A price stabilization mechanism for stMemecoin is maintained through a liquidity buffer pool, preventing drastic price swings.
Staking Insurance Mechanism To reduce the risk associated with staking, DegenFi introduces a staking insurance system:
Users can opt to lock a portion of their rewards as an insurance reserve, compensating for losses in extreme market conditions.
The insurance fund is sourced from trading fees and additional revenue, ensuring ample liquidity for payouts.
3.2 Memecoin Lending Market
DegenFi adopts a more flexible and secure lending mechanism, offering an innovative “non-liquidation lending + intelligent risk management” model. This lowers user borrowing risks while increasing capital efficiency.
Dual-Mode Lending DegenFi’s lending market offers two modes:
Conventional Lending (Over-Collateralization): Suitable for relatively stable market conditions. The Loan-to-Value (LTV) ratio is set between 50%-70%. Users collateralize Memecoins to borrow USDT, ETH, or $DGEN.
Non-Liquidation Lending: DegenFi’s proprietary intelligent leverage mechanism allows users to automatically pledge more assets if the market experiences high volatility, reducing the risk of liquidation.
Intelligent Risk Control + Automatic Risk Adjustment The lending market employs an intelligent risk control system to ensure market stability:
Dynamic LTV Mechanism: Maximum borrowing limits are automatically adjusted according to market volatility, lowering liquidation risks.
Lending Insurance Fund: A dedicated risk buffer fund partially compensates users if market prices experience extreme fluctuations.
Intelligent Alert System: Users can set custom borrowing alert thresholds. When LTV approaches the liquidation point, the system sends notifications and can automatically adjust collateral ratios.
Community Lending DegenFi allows peer-to-peer (P2P) lending:
Users can publish loan requests specifying the amount, interest rate, and term, while other users directly provide funds.
Smart Matching: The system automatically pairs the most suitable borrowers and lenders, enhancing capital utilization.
3.3 Innovative Staking + Lending Combination
DegenFi combines staking and lending to offer more flexible asset management strategies, reducing risks and increasing returns.
Leveraged Yield Strategy
Recursive Lending: Users can stake Memecoins, receive stMemecoin, then use stMemecoin to borrow more assets, amplifying their capital and boosting potential returns.
Smart Arbitrage: Borrow at lower rates on DegenFi to invest in other high-yield DeFi platforms, earning a spread on interest rates.
Non-Liquidation Liquidity Management
Intelligent Collateral Expansion: During major market swings, the system automatically adjusts collateral to reduce the risk of liquidation when prices fall.
Automated Debt Management: Users can choose to auto-pay loan interest, avoiding liquidation due to accumulated interest.
Last updated