The seamless protocol introduces an integrated liquid market in Lido
Flawless Protocol is launching an Integrated Liquidity Market (ILM) for Ethereum (wstETH) on Lido, offering a lending mechanism for token holders looking for an alternative to traditional redemptions.
According to Seamless, ILM will allow stakeholders on Lido to automatically use a borrowing strategy and pooled positions on wstETH, meaning it will automatically reinvest funds from the stake's Ether (ETH) to increase users' rewards.
The difference between this approach and re-processing is the level of complexity of the investment strategy. According to the protocol, ILM manages users' funds continuously. Rebooting, on the other hand, involves reinvesting accumulated ETH to earn additional rewards without relying on advanced automated strategies.
On-chain lending can be used for various purposes, such as leverage or liquidity for traders and long-term investors. This process at Seamless is aimed at single purpose loans where the lender knows where the liquid will be used and the borrower cannot use it for anything else.
As the company previously told Cointelegraph, “the credit mechanisms are on-chain in modern contracts, so liquidity providers have full visibility of how the funds are being used.”
This strategy balances the risk taken and enables lower margin requirements. According to Darryl Hock of Seamless, strategies are created and chosen by the community, before they are implemented into smart contracts.
“Seamless is community-driven, so new ILM strategies and markets can be delivered through the governance process. SEAM management owners and representatives vote on mechanisms to be added to the protocol.
The protocol was built on the Base network in mid-2023 by developers from Seashell, RNG Labs, and Loreum Labs, as well as early contributors from Uniswap, Aave, Ampleforth, and CertiK. According to Defillama, Seamless currently has $41.91 million in Total Value Locked (TVL), with more than $20 million borrowed from the chain since January.
Token holders who share tokens or participate in decentralized financial protocols are often exposed to risks, including security vulnerabilities in smart contracts, market volatility and regulatory uncertainty.
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