ALFPROTOCOL: A Solana Based Leveraged Yield Farming
One Of The Many Case Uses Of Solana’s Alfprotocol
Alfprotocol is created to cater to traders with different appetites for risk aversion. In essence, it provides leveraged and non-leveraged products that would suit both new and experienced traders in a decentralized ecosystem that is powered by Solana, a robust blockchain suitable to handle the core requirements of a decentralized finance platform.
Solana has proven itself to be a viable go-to blockchain compared to Ethereum and other L1 solutions that have many shortcomings when tested with substantial user traffic.
Unleveraged Liquidity Pools
Solana’s Alfprotocol offers two main packaged products for the unleveraged pools in the form of:
- AlfMM – an on-chain autonomous market maker (AMM) decentralized exchange (DEX) service capable of reallocating unused liquidity to the leverage protocol. AlfMM will utilize AMM side order execution to achieve a bidirectional integration between AMM and the Treasury. The AMM acts as a source for the order flow and breaks down operations to acquire the best price option between the AMM and Serum, which gives it a DEX aggregator attribute.
- AAlf – Allotment Alf is a money market solution that utilizes single-asset pools for liquidity providers (LPs) and overcollateralized debt positions for borrowers. Pools are handled separately, with each pool’s asset acting as a base for computing pool utilization and interest rates.
The true purpose of these two products is to provide a platform for risk-averse investors to provide liquidity and trade, all while indirectly providing liquidity for the leverage protocol.
Leveraged Liquidity Pools
Alfprotocol’s leverage feature is a system that enables traders to enter positions with leverage using the Solana blockchain. The protocol will utilize its connectors module, which uses business logic to enter leveraged positions outside protocol Serum to achieve the highest APY and efficiency in capital provision. In addition, to ensure sound liquidation, yet another module called “The Treasury” will track positions’ health at all times by keeping a tokenized representation of the collateral and positions debt made in lockboxes in its custody and being linked with an oracle.
Lockboxes will also be utilized within the leverage protocol by wrapping fungible tokens. Lockboxes are the core technical solution for leveraged lp position health and collateral tracking. Alfprotocol’s users will be able to use multiple lockboxes as collateral for a single position.
Alfprotocol is currently in development. To find more info about the project and stay updated with the project’s current progress, please visit the website and check out the whitepaper.