Decentralized Finance (DeFi) is an ideal substitute for conventional centralized systems since there are no middlemen involved, making transactions transparent and safe.
Non-fungible tokens (NFTs) are already actively infiltrating the DeFi sector, introducing new concepts and ideas while bringing fresh perspectives on how to improve existing procedures.
DeFi has uncovered innovative methods for recording and displaying value on-chain, opening up a new world of opportunities, while NFTs continue to redefine value in the course of their recent ascent to prominence.
However, as the usability of non-conventional assets represents a practically limitless market, the domain must embrace the diversity of digitalized assets rather than categorize them in order to realize the full potential of cryptocurrencies as a whole.
This is why Paribus is important as it embraces locked liquidity holdings as well as other exotic assets like NFTs in all forms. Hence, its users may use their assets by lending, borrowing, betting, and doing other things to amass yields instead of letting them sit idle.
Paribus, a decentralized, cross-chain borrowing, and lending system is keenly interested in redefining the norms in this industry as it offers solutions that are not just comprehensive but also innovative and interoperable.
With Paribus, value may be tapped into wherever it exists as it enables users to tokenize any verifiable off-chain asset by combining a cutting-edge approach to non-fungible tokens (NFTs) with decentralized finance (DeFi).
The Paribus’s borrowing and lending protocols may be used by users to harness these NFTs, giving previously underutilized assets a new purpose.
The elements of Paribus, such as algorithmic NFT valuation, peer-to-peer lending, DAO, and LP and synthetics, are made to develop with new crypto assets while capturing the value held in linked blockchains.
Paribus also provides services that are mostly unexplored and underutilized in the cryptosphere. The following are the methods offered by Paribus by which value can be harnessed:
Thanks to Paribus, NFT collectors can utilize their digital art for so much more as they can take part in NFT Staking and NFT Collateralized Loans. Hence users with NFTs will now have access to collateralized loans rather than just storing NFTs as collectibles. They may also tokenize NFTs for use in other protocols and pool them to produce yield.
2. Synthetic and Yield-Bearing Assets
Some readers may already be familiar with the fact that many DeFi ecosystems provide synthetic assets, which frequently have a single purpose, and most times it might be difficult to make passive income from these assets. However Synthetic assets will have more flexibility with Paribus thanks to efficient ways of earning income across chains.
3. Liquidity Positions
By staking LP tokens or using them as collateral for loans, users of Paribus may increase the value of their Liquidity Positions. Paribus’s ability to provide liquidity to DeFi protocols may open up more revenue streams.
Thus, a framework for investors to earn from their digital assets is provided by the Paribus protocol which has also executed an outstanding set of contracts and tools to its framework which aids in enhancing its performance.
These contracts include:
a. Fee structure:
A borrow fee is charged for each borrow made on the Paribus protocol. As of the time of writing, this had a value of 0.2%. (However, this rate is subject to change via a governance voting procedure).
The cost will be added to the overall amount borrowed and will be reported on the user’s dashboard. The protocol reserves will be increased when these fees are gathered. This charge is meant to act as a “safeguard” to stop short-term borrowers from being mistreated.
b. Price feeds:
To ensure that asset exchange rates accurately represent their genuine value, Paribus makes use of the most dependable and trustworthy price feeds from Oracles. In addition to combining quotations from the top twelve exchanges to provide its end users with the best rates.
Considering the characteristics of the interest rate model and its capacity to dynamically modify itself in response to market circumstances. Comprehending the model adopted by Paribus is essential for both borrowers and lenders to prevent exorbitant interest rates and liquidations.
Liquidations are set in place to maintain the system’s sustainability and self-sufficiency. Through the liquidate function on the “Liquidation Manager” contract, liquidations may be carried out by robots, other dApps, or users when their borrowing balance surpasses their entire collateral value as a result of decreasing asset prices or rising asset prices for borrowed assets. By using this function, the assets of the invoking party will be exchanged for the borrower’s collateral at a price that is lower than the market rate.
The interactions between the Paribus protocol and the linked smart contracts are established using the Controller smart contract which is also used to whitelist certain assets and permit their use in Paribus.
Find out more about Paribus and keep you with all their recent news and developments via the following links: