Idle Finance: An innovative entry into the DeFi arena
A new and innovative DeFi protocol has been reviewed by Turing Research Network as we look at some of the emerging new players in the decentralised finance (DeFi) space.
The History of Idle Finance
In the Summer of 2019, the team from Idle Protocol took part in the Gitcoin Beyond Blockchain hackathon project, before moving onto the Consensys’ Tachyon acceleration program.
The protocol has been developed during the course of 2020, adding assets and underlying protocols. In November 2020, the team introduced a governance system inspired by Compound and Uniswap models.
Open, liquid protocol governance through $IDLE
Idle Finance delivers a fully decentralized model with Forum + snapshots + on chain votes encouraging community participation in the forum to foster new ideas & features discussion.
From the most recent Community Discussions the community has voted to establish the League structure which will allow the community to build a plan around those discussions and then take initiatives with the most momentum through to development and integration phases.
How it works
Funds deposited on Idle.Finance are automatically routed through Compound, Aave, and dYdX. Idle fully automates and optimizes the interest accrual process for end-users to ensure they are constantly receiving the highest interest rates amid the aforementioned platforms.
Instead of using a single yield provider, Idle Finance users benefit from multiple yield farming opportunities, leveraging algorithms that perform optimization strategies through yield rebalance in the selected protocols.
This reduces time and costs, and also risks are mitigated thanks to the implementation of DeFiScore’s risk rates. In comparison to other yield aggregators, the Dynamic Rebalance system allows to deposit funds in many protocols at the same time, avoiding being stuck on a single network and increasing resilience against hacks and bugs.
Choose your own strategy from Best Yield or Risk Adjusted
Currently, Idle offers two different allocation strategies:
- Best-Yield: this strategy combines multiple money markets to automatically provide the highest interest rates, beating the best traditional offerings across interest-bearing tokens and DeFi protocols.
- Risk-Adjusted: this strategy automatically changes the asset allocation in order to find the optimal mix between risk scores and yield.
Idle currently supports the following underlying tokens: DAI, USDC, USDT, SUSD, TUSD, WBTC.
How to become a Liquidity Provider
At the time of writing, the Liquidity Mining is live: LPs receive these tokens in proportion to their provided liquidity over the course of the next 24 months. 0.5 IDLE per block will be linearly distributed during the aforementioned period.
Once you have a wallet and enough funds (remember to also consider gas costs!) you are ready to provide liquidity in Idle’s pool.
You can pick up a specific pool (e.g. IdleDAIBestYield) and provide liquidity there by clicking “Deposit”.
To Deposit your DAI into Idle you need to approve Idle’s Smart-Contract first. Your wallet will pop up and allow you to confirm the operation by sending a transaction (you need to spend a tiny bit of ETH to perform this action, but it’s cheap). Then you can deposit your assets.
Once funds are deposited, you will start to earn yields and receive governance tokens ($IDLE and $COMP).
In order to withdraw your funds, enter the dashboard, click “Manage” and then click “Redeem”.
Here you can claim all assets in Idle, or only governance tokens ($IDLE and $COMP). If you redeem less than the “Available balance for Cheap Redeem”, your transaction will be cheaper.
How to track your returns
The Idle dashboard allows you to track the accrued interests and the amount of received governance tokens over the time.
You can also use the following platforms:
The yield-generating building block for all idle funds
While the project is in its early stages they are already seeing significant interest from integrators across with space with many possible use-cases, from plain APY boost for dApps/protocols like Harvest or yEarn, to DAOs’ revenue stream with Pool Party, and generally Idle protocol is the perfect component to build a yield experience for to compliment a variety of DeFi products or platforms.
Total Value Locked & Battle Tested
We particularly like the focus of the Idle team on security and safety, having been Quantstamp verified with full reports available on their website idle.finance. Currently the platform is managing just over $67.2 million dollars at the time of writing (January 26th, 2021), and this number is expected to rise significantly as the protocol develops and integrations with complimentary protocols take place.
Supported by major industry players
After starting as a hackathon project in 2019, Idle was selected by the ConsenSys Tachyon accelerator program, connecting the team with investors, developers, and other DeFi community members. Following their success, the team successfully completed a seed funding stage raising over $1.2m from major industry names such as Consensys and Dialectic.
The Idle community has recently been discussing the forward roadmap to identify the priorities for future development of the protocol. Based on this discussion a matrix has been developed to help focus development initially on high value, low effort initiatives that will be prioritised for development in the near term.
$IDLE is the Governance token of Idle protocol.
At the time of writing, Idle has 1.354 million tokens in circulation from a maximum circulating supply of just 13 million according to CoinGecko.
The Idle Token was recently added to the SushiSwap Onsen Menu as well as being available on Uniswap.
In the Idle Governance system, each IDLE token corresponds to one vote. IDLE token holders can vote through self-delegation or can delegate the voting action to any Ethereum address.
The Governance manages the strategic decisions of the protocol enabling community participants to drive and contribute to the protocol’s future developments.
The governance forum can be accessed here; https://gov.idle.finance
We believe that Idle.Finance offers an innovative and unique addition to the DeFi ecosystem, and its success will be driven by continued engagement from integrators and developers alike.
During December and January 2021, we are already seeing continued interest in Idle.Finance with contributions to develop a Smart Treasury developed by Asaf Silman which will launch imminently based on the final peer reviews being completed now.
Further contributions from notable developers such as Emiliano Bonassi who has been developing Yearn v2 Strategies for Idle.Finance.
We expect to see expansion of the strategies available on the platform, with increasing integrations and use cases which we expect to support the sustainable development of Idle.Finance as a key player within the DeFi ecosystem.
Idle.Finance offers a glimpse of the future of Decentralised Finance helping make the space more accessible for regular people looking for more attractive Yield Generating products which is not possible in a traditional finance sector.
About Turing Research Network
Turing Research Network was founded in early 2020 by a group of passionate crypto enthusiasts and active members of the blockchain community.
Our vision is to support the development of our crypto communities enabling knowledge sharing and unbiased critical evaluation of technology and projects shaping the future of the blockchain industry.
We have a long-term perspective on the development of the projects we support and look to establish and foster the communities in which we interact
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