Cardano DeFi Advances

Hi,

What's Spotlight? Every week, we highlight the most interesting events happening around Cardano. We want to help you cut the noise and find the signal.

It's the week of V2s! Cardano DeFi is growing, and our apps are moving from bootstrapping to innovating. This week we discuss some of the most prominent apps on Cardano and the upcoming features with their V2 versions.

Indigo's iAssets represent synthetic assets enabling users to access currencies like USD, ETH, and BTC on Cardano without reliance on centralized counterparts. Despite their innovative nature, iAssets have struggled to maintain their peg.

These synthetic assets are minted through debt against ADA collateral. When de-pegging occurs, reducing the user's debt is an incentive to close the vaults and re-establish the asset's peg. However, market dynamics often encourage users to retain iAssets even during prolonged downturns.

Indigo V2 aims to address these challenges while introducing numerous enhancements. Let's delve into the features of Indigo V2:

• Maintenance Ratio: Dictates the minimum collateral ratio required to mint new assets.
  

• Liquidation Ratio: This works like the Minimum Collateral ratio and acts as the point below which your vault would be liquidated.
  

• Redemption Margin Ratio: This allows users to redeem other users’ vaults during a depeg. For Vaults below RMR, any redeemer can supply an iAsset and redeem the underlying ADA. This leads to a reduced debt position for the vault owner, while the redeemer can earn a 2% fee.
  
  

• Interest Rate: Indigo currently has 0 interest on borrowing assets. With free borrowing, vault owners can take long-term leveraged positions without paying any fees. V2 will have a dynamic interest rate, incentivizing vault owners to close their vaults.
  

• Aiken: A rewrite in Aiken allows the protocol to optimize throughput. Indigo V2 is expected to be faster and smoother.
  

• Fee Sharing: Indy stakers will be able to earn protocol fees. They can earn fees through iAsset minting, liquidation, and redemptions.
  

• DAO: The Indigo DAO treasury will earn fees through the dynamic interest rate on iAssets. Indy holders can vote on how to use the treasury to grow the project.

With its exciting features, Indigo v2 is poised to impact the Cardano ecosystem significantly. Learn more about Indigo V2 here.

Minswap is the top DEX of Cardano, with ~60% of the market share in TVL terms. The Min team is working on it’s V2 DEX, and it promises a host of exciting features:

• Stableswap: They are building an Aiken-based open-source stableswap DEX. Stable pools allow you to efficiently swap between stable-paired assets like USDM and Djed or iBTC and cBTC.
  

• Faster: Minswap V2 is expected to be at least 5x faster than V1. This is achieved by incorporating Plutus V2 features like reference script.
  

• Auto-routing: This will allow a token to be routed through multiple pools to give you the best price. Example: If you are trying to swap Djed <> WMT, you can be routed through a Djed <> USDM and then USDM <> WMT pool if that’s the more efficient route.
  

• Dynamic Fees: This allows fees to react to market conditions and can enable LPs to earn more money during periods of high volatility.
  

• Advanced Order Types: You can only use market or limit orders on Minswap. However, with V2, you can place advanced order types like Take Profit, Stop Loss, or One-cancels-another (OCO).
  

• Minswap Pro: This will offer an enhanced UI for traders, deeper analytics & insights, lower trading fees & more.

Minswap incorporates some of the best features across various DEXs, such as Splash, Muesli, and Axo. V2 surely packs a punch and is expected to upgrade the Cardano DEX experience.

Liqwid V2 is here!
Liqwid is the premier lending/borrowing app on Cardano. It ranks in the Top 3 apps on Cardano with ~$35M in TVL. Liqwid offers a simplified UI/UX for users to borrow assets or earn a yield.
Liqwid V2 brings on the features of Aave v3 and more! Let’s discuss some of them:

• Borrow & Supply Caps: A borrow cap is implemented not to let borrowers borrow 100% of any asset. This will allow enough liquidity for lenders to withdraw when they want.
  
  Supply caps will help reduce exposure to any particular asset.
  
  

• E-mode: Paired assets can have higher LTV and liquidation thresholds in this model. An example is Optim's Ada yield Bonds & Ada; the collateral ratio can be set to >90% as Optim bonds are tightly correlated to Ada.
  

• Isolation Mode: Liqwid’s pooled lending model requires them to selectively add assets to the protocol. With isolation mode, newer assets can be added to the main pool in isolation. This allows risk to be contained to those vaults only.
  
  

• Faster: The offchain infrastructure has been completely overhauled. Transaction building and UI can be expected to work faster after the upgrade.
  

• In-app liquidation: Anybody can choose to liquidate pools below the liquidation thresholds. This helps decentralize the process and allows for efficient liquidations.
  

• Multi-loan: Users can now create multiple loans using the same collateral. This provides more flexibility to borrowers.
  

Liqwid V2 tackles some of its main problems - more assets, higher efficiency, and reduced risk of insolvency. 

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