Prestare Finance (Prestare) is a lending protocol that offers a lower collateral ratio and can even support under-collateralized loans with almost any assets, without using off-chain information.
Buidl info: https://dorahacks.io/buidl/3197
Live Demo: https://prestare.finance/
- Under-collateralized borrowing is achieved by allowing the borrower to use a portion of the previously accumulated interests as collateral to borrow more funds next time. A portion of interest paid by borrowers will be reserved in ‘Credit Reserve Pool’. 1 CRT is minted with $1 in the pool, then distributed to borrowers who contributed to the pool. CRT can be used for collateral in the next borrowing, making the loan under-collateralized.
- SoulBound Token containing credit score for all users need to be minted if users want to borrow on Prestare. Users with higher credit score can have a loan with lower collateral ratio. An address’s initial credit score will be capped and determined based on the address’s prior interactions with other protocols and addresses when it first interacts with Prestare.
- Permissionless Listing is introduced to Prestare by adopting isolated assets tiers. Assets on Prestare are divided into different tiers according to their risk. Users putting certain tier assets as collateral can only borrow the money from the corresponding tier pool out. If prices of low-tier assets are manipualted, only deposits in the particular tier will be affected. Risks are minimized.
- Internal Liquidation can be done on Prestare. Liquidity providers can choose to use their deposits to buy liquidated assets. As a result, depositors can swap deposits into their favourite assets with discounts and save gas fees and slippages which occur on DEX, while enjoying saving interest on Prestare. This is designed to absorb debt from liquidations, and reward depositors with the liquidated collateral shared between depositors in proportion to their deposit size.
Problems that Prestare is solving
- Collateralized loans
Under-collateralized borrowing has been the hard-to-achieve holy grail in decentralized finance (DeFi). In order to operate trustlessly, decentralized lending protocols, like Compound and AAVE, are predominantly over-collateralized to ensure the lenders can be paid back in case of a default. This means that borrowers will have to deposit an amount that exceeds the value of any loans. As noble as it sounds to serve the underbanked and the unbanked, the truth of the matter is that over-collateralized borrowing does not reach the borrowers in need. Because they are unlikely to afford the necessary crypto assets to begin with. Simply put, over-collateralized loans are not an efficient allocation of capital.
- Permissioned Listing
Compound and Aave are two examples of first-generation DeFi lending systems. Users have access to loan and borrowing features for a few of the most liquid ERC20 tokens thanks to these protocols. However, these protocols have relied on a permissioned listing system to protect their users from the hazards associated with lending and borrowing illiquid or volatile assets because they were not intended to handle those risks.
We are seeking$100,000 in Dora DAO Grants. Depending on available funding, we will be able to accomplish the first two development milestones, and/or all of the milestones outlined below.
i. Upfront ($35k)
The initial 35k fund will be used to kickstart the project and fund our initial operating costs, including: a professional development environment, our website’s frontend design, lawyer fees associated with setting up the legal BVI entities and preparing for fundraising rounds, and the legal entities themselves.
- $10k - Domain name (website / frontend)
- $15k - Professional development environment (backend/smart contract)
- $5k - BVI (British Virgin Island) Entity
- $5k - Kickstart the marketing campaigns
ii. Milestone 1 ($35k)
We’re targeting our first milestone to be complete in an estimated 2-3 months. We are on the way to the minimal viable project (MVP) development. The first milestone will mark the launch of first beta testnet for the community to interact with. Additionally, we’ll start our marketing campaigns around the time the MVP launches, which will incur additional costs.
- $10k - Launch MVP - Deploy smart contracts for under-collateralized borrowing and minting of the Soulbound Token
- $10k - 1st beta testnet and get feedback from the community
- $10k - Marketing: KOL, media, and community management to get beta testers
- $5k - Lawyer Fees
iii. Milestone 2 ($30k)
We’re targeting our second milestone to be complete around 4-6 months after our first milestone. By the end of the second milestone, we’ll be performing multiple independent smart contract audits after the permissioned testnets are made available. The marketing campaigns with the help of media and the press will continue in this phase.
- $10k - Deploy smart contracts for permissionless pool and internal liquidation, Launch 2nd beta testnet and Open-source the codebase
- $10k - Conduct a Smart contract and Code audit
- $10k - Technical Writing & Content – improved documentation, tutorials (text and video) and Marketing & Technical Writing – developer support, community management, sponsored posts
- Optimize user experience with new growth metrics and feedback
Team Formation, Business Model Design, Proof-of-concept
Core Contracts Completed, Seed Fundraise, Whitepaper Release
Testnet Release, Bug Bounty Launch, Ecosystem Partnerships, Security Audits
Mainnet Launch, Multi-chain Deployment, Governance