Note that Kashi 1.0 has been deprecated. Deposits and borrows have been disabled in the UI.
Kashi is a lending and margin trading platform built on top of Bentobox. It allows anyone to create customized and gas-efficient markets for lending, borrowing, and collateralizing a variety of DeFi tokens, stable coins, and synthetic assets. Kashiās broad diversity of tokens is supported through the use of a unique isolated market framework. Unlike traditional DeFi money markets where high-risk assets can introduce risk to the entire protocol, in Kashi, each market is entirely separate, meaning the risk of assets within one lending market has no effect over the risk of another lending market.
Traditional lending projects permit users to add liquidity into a pool-based system. In these systems, if one of the assets were to drop in price faster than liquidators could react, every user and asset would be negatively impacted. In this sense, the total risk of pool-based platforms are determined largely by the riskiest asset listed on the platforms. This risk increases with every extra asset that is added, thus leading to a very limited choice in assets on most platforms. Kashiās unique design enables a new kind of lending and borrowing. The ability to isolate risks into individual lending markets means that Kashi can permit users to add any token they desire.
In addition, Kashi and SushiSwap together enables users to achieve leverage in one click, without ever leaving the platform. Users can borrow an asset and swap it instantly for more collateral, thus leveraging a long on the collateral.
Lending & Borrowing in DeFi
If you are new to DeFi, you may be wondering how protocols ensure that their users always safely get back the funds that they loan out.
Most lending protocols in DeFi use the same structure - overcollateralized loans.
This means that borrowers will need to lock collateral of their own in the system to be able to borrow funds. The value of the collateral needs to be superior to that of the loan.
For example, Alice can borrow 100 USDC if she locks $150 worth of ETH in the protocol. If the collateralās value (in this case ETH) falls under the value of her loan, it will be sold against the asset which she borrowed (in this case USDC). The lender will be repaid in full by the protocol. This is called liquidation.
TL;DR - If Aliceās ETH collateral value drops close to $100 USDC, the protocol will automatically sell it to repay the user that lent the $100 USDC to Alice.
Liquidation happens prior to the collateral value going under the loan value. 80% is usually the maximum threshold. We call that LTV (Loan To Value). This means, if the loan value is over 80% of the collateral value, the collateral will automatically be liquidated.
Liquidations are usually executed by liquidation bots that monitor the protocol. They earn a small fee by doing so.
Thanks to smart contracts, everyone around the world can lend and borrow funds without the need of third parties!
How Is Kashi Different From Other Lending Platforms?
Both Aave & Compound use a pool-based system which tags their funds to various tokens on their platforms. This means that the solvency of any token will affect the entire platform.
Kashi's isolated lending architecture mitigates the risks to a specific pair only, thus enabling any token to be listed as an asset/collateral. It uses an elastic interest rate to incentivize liquidity into a certain range and oracles to provide price feeds for all tokens.
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