Lybra Finance (LBR) is a protocol designed to streamline the process of liquid staking for Ethereum (ETH), allowing previously locked ETH to become readily usable within the Defi ecosystem.
In this article, FMC will introduce this finance platform that could optimize the profit of holding ETH while providing leverage on the $ETH position without incurring funding fees, borrowing fees, and more.
What is Lybra Finance (LBR)?
Lybra Finance is an Ethereum-based lending protocol that leverages liquid staking derivatives to enable users to collateralize their staked ETH for borrowing.
By depositing staked ETH, users can create eUSD, Lybra’s interest-bearing stablecoin, without incurring any fees, thereby enhancing capital efficiency and generating interest income.
How does the Mechanics of Lybra Finance (LBR) work?
Lybra Finance is an Ethereum staking platform that presents a wide range of opportunities for its users, including:
Lybra Protocol offers a unique borrowing system with negative-interest loans, allowing users to borrow eUSD by using their ETH as collateral. This approach lets users earn a steady income while keeping their ETH holdings intact, as the held eUSD also accumulates interest over time. To be eligible for borrowing, users must maintain a collateral rate above the safe collateral rate, which is set at 160%.
Collateral, in this context, refers to the assets borrowers must provide as security for their loans. Currently, Lybra Protocol supports ETH and stETH as collateral. ETH deposits are automatically converted to stETH, and the protocol treats 1 ETH as equivalent to 1 stETH.
The Lybra Protocol does not impose borrowing costs or interest charges. Instead, it converts revenue generated by Liquidity Staking Derivatives (LSD) from stETH into eUSD and distributes it proportionally to eUSD holders. This means that borrowers can benefit more the longer they maintain their eUSD holdings.
The annual percentage yield (APY) for stETH LSD is approximately 5%, with 1.5% of it allocated to esLBR holders (subject to potential revisions by the Lybra Community DAO).
Repayment timelines are flexible, as there is no set payback period for loans issued by Lybra Protocol. Borrowers are allowed to keep their loans open as long as they maintain a collateral ratio of at least 150%. The collateral rate fluctuates over time in response to changes in ETH’s price, and borrowers can influence this rate by adjusting their collateral or debt—such as adding more ETH collateral or paying off a portion of their debt.
eUSD maintains a fixed value compared to the US dollar through direct and indirect mechanisms. Directly, you can exchange 1 eUSD for $1 worth of ETH, and a 150% minimum collateral ratio sets upper and lower bounds, creating arbitrage opportunities known as “hard peg mechanisms.” Indirectly, eUSD benefits from a “soft peg” mechanism, treating eUSD as equivalent to USD, making parity the equilibrium.
Rigid redemption lets you exchange eUSD for ETH at a 0.5% fee, which goes
to the redemption provider. This process is separate from repaying debt.
The redemption fee is typically 0.5% of the redeemed ETH. If stETH is used for rigid redemption, there’s no fee.
Redemption providers offer this service and receive incentives like token airdrops and service fees. During redemption, collateral decreases, but debt reduces too. This makes your collateral safer, and redemptions can be partial or full.
Benefits of being a redemption provider include earning a 0.5% fee, avoiding total loss on collateral, and increasing LBR rewards yield by 20%.
Lybra Finance (LBR) Token
Token Key Matric
- Token name: Lybra
- Ticker: LBR
- Blockchain: Ethereum
- Token contract: 0xc98835e792553e505ae46e73a6fd27a23985acca
- Token Type: Utility
- The Lybra (LBR) Token is the native token powering the Lybra Protocol.
Lybra Finance (LBR) Tokenomics
LBR coin’s statistics
At the time of writing this article,
- The price of the asset stands at $0.912
- The market capitalization is $37.2 million;
- There are 41 million coins in circulation;
- The maximum supply is set to be 100,000,000;
- The average daily trading volume amounts to $740,000
- The all-time high was $4.48;
- The all-time low was $0.283
- Use Cases: LBR tokens hold various roles within the Lybra Protocol, including staking, governance (voting), minting, and liquidator rewards.
- Governance: LBR token holders wield voting authority within the Lybra Protocol, with their influence directly proportional to their staked LBR tokens in the voting contract.
- Objective: LBR holders are tasked with overseeing the protocol and managing financial risks associated with eUSD, focusing on maintaining stability, transparency, and efficiency
Lybra Finance has achieved a significant milestone with the introduction of the eUSD stablecoin, offering a reliable and interest-bearing asset for investors. Since its launch, the protocol has gained substantial traction, boasting over $300 million in total locked value. While a smart contract audit did uncover minor concerns, it largely validated the protocol’s safety.
Empowered by the governance LBR token, Lybra Finance’s decentralized management has played a vital role in maintaining transparency and stability. As with any investment, comprehensive research and a solid understanding remain essential, even in light of Lybra Finance’s apparent success.
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