Solana’s Alfprotocol has many exemplary uses. Alfprotocol was created to appeal to traders with different appetites for risk aversion. At its core, it provides leveraged and non-leveraged products to suit both new and experienced traders in a decentralized ecosystem powered by Solana, a robust Blockchain suitable for meeting the core requirements of a decentralized finance platform. Solana proved to be a viable, chosen blockchain when tested with significant user traffic compared to Ethereum and other layer one solutions, which had many shortcomings.
Alfprotocol and leveraged liquidity pools
Solana’s Alfprotocol offers two main packaged products for leveraged pools:
- AlfMM – an on-chain autonomous market maker (AMM) decentralized exchange (DEX) service that can reallocate unused liquidity to leverage protocol. AlfMM will use AMM side order execution to provide a bidirectional integration between AMM and Treasury. AMM acts as a source for order flow and reviews transactions to get the best price option between AMM and Serum, giving it an aggregator feature.
- AAlf – Allotment Alf is a money market solution that uses single asset pools for liquidity providers (LPs) and overcollateralized debt positions for borrowers. Pools are treated separately, with the existence of each pool serving as a basis for calculating pool usage and interest rates.
The real purpose of these two products is to provide a platform that will provide liquidity and trading to risk-averse investors while indirectly providing liquidity for the leverage protocol.
Leveraged liquidity pools
The leverage feature of Alfprotocol is a system that allows traders to enter leveraged positions using Solana Blockchain. The protocol will use the binder module that uses business logic to enter leveraged positions outside of the protocol Serum to achieve the highest return and efficiency in raising capital. Additionally, to ensure robust liquidation, another module called “Treasury” will always monitor the health of positions in conjunction with an oracle, keeping a watch on the tokenized version of collateral and position debt made in lockboxes.
Locked boxes will also be used in leverage protocol by wrapping exchangeable tokens. Lock boxes are the primary technical solution for leveraged LP position health and collateral tracking. Alfprotocol users will be able to use multiple locked boxes as collateral for a single position. Alfprotocol is currently under development. To learn more about the project and stay up to date with the current progress of the project, please visit the website and browse the whitepaper.
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