Paribus: This Defi Protocol Unlocks the Underlying Liquidity in the Crypto Market

Image source

In over 12 years, crypto markets have grown from zero valuation to their market cap, briefly touching $3 trillion last November. Since the Defi summer of 2020, decentralized finance has become one of the foremost use cases of crypto assets. Unlike traditional finance, Decentralized finance instruments have been an ever-growing and ever-evolving class of assets with virtual economies around them being developed and innovated upon at a blistering pace. But as the userbase grows, so grows the coterie of opportunities and challenges. These Defi products are both vulnerable and flexible, and their network effect is unfathomable as more users get added to the aggregator and compounder.

The rapid evolution of the Defi space has created innovations, products, and markets that remain underserved. Take, for instance, NFTs. Currently, we have limited ways to generate passive income from NFTs. NFTs must be generally traded on secondary markets or remain idle in the wallets representing opportunity cost.

Also, Defi assets have differential value being built over different protocols. Interoperability is also a prominent issue in the multi-chain Defi verse we are currently inhabiting. For instance, each NFT has a subjective value, making it difficult to liquidate via conventional modes. On the same lines, yield-bearing assets are prone to become illiquid, and synthetic assets have to bear systematic protocol risks.

Paribus, a cross-chain decentralized finance protocol, addresses this liquidity issue by transforming these stagnant assets to make them more suited and productive for liquid and effective market conditions. Paribus makes non-conventional assets more interoperable, predictable, and reliable.

Overview of the networks that Paribus envisions to integrate with

It aims at unlocking the underlying liquidity for conventional and unconventional digital assets without liquidating these assets. The protocol opens up new avenues of passive income sources by letting the Defi holders and investors extend the reach and utility of their digital assets and positions via a lending market. Paribus operates on the mantra,

‘If it (digital asset) can be verified, it can be sold. If it can be sold, there is intrinsic value. If there is intrinsic value, this value can be leveraged.’

Even though multiple dApps are unlocking a range of features for investors to earn passive income to entice them and prevent their exit, there are gaps in the market that need to be addressed to unlock more liquidity and lower barriers. Paribus is focused on deriving value for the existing fungible and non-fungible assets and lending them further liquidity. Let’s learn how.

To make Defi less siloed or chain-dependent, interoperability is a must. Paribus protocol believes that four major areas need major attention to bridge gaps and boost overall liquidity in the exiting markets:

  • Chain agnostic lending/borrowing
  • Virtual land collaterals
  • NFT collateral-based loans
  • Synthetic assets

Paribus operates on the Cardano blockchain using a ‘pool of assets’ with algorithmically derived interest rates based on the supply and demand for a given asset. It takes the interest modeling approach from Compound and expands the idea to go beyond coins and tokens. By utilizing and extending Cardano’s ability to plug into existing blockchains, Paribus unlocks liquidity across chains and a spectrum of assets. Some of these assets and areas include:

  • NFTs such as digital art, music, crypto collectible, virtual lands, etc.
  • Synthetic assets and Liquidity protocol( LP) tokens
  • Smart contract insurance policies
  • Domain names
  • Liquidity positions
  • Traditional assets such as ADA, ETH, and DOT

The Paribus protocol brings all of these forces together to offer Defi holders and investors a platform to realize earning power from their digital assets. Cardano allows Paribus to remain chain agnostic and simultaneously connect many assets across multiple blockchains to allow the value flow freely. Paribus’s features, including algorithmic NFT valuation, P2P lending, DAO, and LP and synthetics, are designed to evolve with new crypto assets while capturing their value stored in interconnected blockchains.

Paribus inherits all de-facto standards of a Defi dApp and identifies an array of applications which include:

  • NFT collateral-based loans: Borrow against investments to free up capital.
  • NFT Staking: Pool value with others, like-NFTs, to earn yields on these assets.
  • P2P and Pooled Lending: NFT ownership becomes flexible and optimized.
  • LP collateral-based loans: Borrow against AMM liquidity positions.
  • LP staking: Staking pools for LP tokens from multiple blockchain liquidity pools.
  • Lend, borrow or stake synthetic assets: capital efficiency, flexibility, cross-chain.
  • PBX token profit-sharing: earn fees collected by the network, tiered staking.

As Defi moves forward, interoperability and liquidity of these Defi assets and instruments will be paramount issues needing maximum focus. Paribus unlocks the true potential and liquidity of these assets by evolving them into interoperable financial instruments to make them capable of being used within Defi protocols on any chain.

--

--

--

We are here to serve you with the most interesting and useful articles.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Crypto Market Intel: How did the Top 3 crypto holders respond to recent price gains?

Crypto Diaries: Coinbase rumored to be going Public

TrustFi Announcement to Private Investors and Community Members in Dec.

UNIZEN WEEKLY PULSE #14

Hooty: Everything so far

SnakeCity — Token Burn Annoucement

Introduction to DeFi strategies: The best ways to earn through DeFi

Will Businesses Ever Use Stablecoins?

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
KingPublications

KingPublications

We are here to serve you with the most interesting and useful articles.

More from Medium

Introducing 6 of the best top decentralized exchanges in 2022

DeFi Yield Protocol V2 Pools are live on Ethereum, Binance Smart Chain, and Avalanche

Top Crypto Trends and What to Invest In

Digital Gold: A Look at Bitcoin and the History (and Future) of Money