Review Defrost Finance ($MELT) – Advanced platform powering a new stablecoin “H2O”

There is a high demand and opportunity for DeFi-native decentralized stablecoins. Defrost Finance creates its H2O stablecoin using collateralized LP Tokens through Avalanche and decentralized cross-chain bridges.

What is Defrost Finance ($MELT)?

https://www.youtube.com/watch?v=8iBVwLzRVSo

Defrost Finance is a decentralized protocol that allows you to leverage LP Tokens or other pool tokens from Avalanche and cross-chain protocols as collateral for generating H2O. Loans using your LP tokens as collateral are paid in the form of H2O (soft pegged to the U.S. dollar) and each vault requires maintaining a healthy collateral position.

The platform’s main goal is to “Defrost” your LP tokens into liquid H2O that can be traded. It can be freely transferred to others, used to purchase other goods and services, or retained as a hedge against market volatility, among other things. Another interesting part of the Defrost platform is that decentralized cross-chain functionalities and bridges are easily enabled us to expand to more blockchains.

Defrost and the H20 stablecoin

Users can use Liquidity Pool (LP) tokens from decentralized exchanges and other DeFi protocols to mint H20, a stablecoin tied 1:1 to the US Dollar. These LP tokens will be stored in vaults and used as collateral for the H20 that will be created. This may be accomplished by the employment of a diverse range of assets, ensuring that the broadest possible range of investors is covered.

Minting H2O

A user goes to the Defrost Finance portal and creates a Vault. The fund is with a specific type and amount of collateral that will be used to mint H2O. Once a Vault is funded, it is considered collateralized. Users start a transaction in order to get a certain amount of H2O in exchange for keeping their collateral in the Vault.

Outstanding Features

What is the project trying to achieve?

The Defrost protocol produces highly liquid stable assets like H2O by using idle, less liquid assets such as liquidity provider tokens that are generally unused. You may stake your LP Tokens on the system, using them as collateral to create H2O, and then return your loan in the future. In this manner, you may gain liquidity without selling your LP tokens.

Defrost technology provides users with automatic leverage by staking LP tokens in contracts rather than selling them. H2O operates similarly to other cryptocurrencies in that it may be freely transmitted to others, used as payment for other assets and services, and retained as a hedge against market volatility.

What is the unique selling point?

Vault

Through smart contracts called Defrost Vaults, any acceptable collateral assets can be leveraged to create H2O via the Defrost Finance Protocol. Through the Defrost Finance interface, users may access the Defrost Finance Protocol and create Vaults.

Vaults are classified according to the collateral utilized to mint H2O. Users generate H2O against their collateral and then burn it when they return their created H2O balance. The generation of H2O occurs totally on-chain, allowing anybody to audit the quantity of H2O in circulation and the collateral supporting it.

Super Vault

One issue has remained thus far — users who stake their LPs have been able to keep transactions and other fees charged by the platform on which they hold their tokens, but have been forced to renounce native incentives in order to mint H2O.

To solve this issue, Defrost Finance introduces a next-generation vault that will allow users to enjoy further rewards from three sources:

• Embedded rewards in the LP tokens, like interest or transaction fees
• Mining rewards distributed by the interoperated projects
• MELT rewards for minting H2O and providing liquidity on Curve

This means when using LP tokens to mint H2O, users will receive fees (from the LP tokens on the original platform) + rewards (also from the original platform) + MELT rewards (from Defrost).

Super Vault II

Super Vault II was introduced in Defrost Finance from 2022/1/25 with the cooperation of Stakedao’s av3CRV strategy. The main difference with the previous Super Vault is that the new one will have a “ticket” for users who wish to join, paid in MELT, and proportional to the LPs deposited.

• The basic function is still the same as Super Vault and users can still use it to leverage their positions.
• The Super Vault II will cover safe LP tokens with good and sustainable APYs.
• However, a small amount of Melt should be paid as a ticket to join the Super Vault II.
• In sdav3CRV – Stake DAO (SV_II), for each $1000 LP tokens, a user should pay 5 MELT tokens as a ticket. In av3crvGauge – Curve (SVII), for each $1000 LP tokens, a user should pay 2.5 MELT tokens as a ticket. In qiDAI (SVII) and aAVAXb – ANKR (SV_II), for each $1000 LP tokens, a user should pay 1.25 MELT tokens as a ticket.
• The ticket is charged one time when users deposit their LP tokens into the Super Vault.
• The MELT charged will be burnt using the following address: https://snowtrace.io/address/0x0000000000000000000000000000000000000001
• Over the long term, the tickets could be adjusted to balance the use of leverage.
• The initial cap of the new Super Vault is an important index to balance the use of leverage.

Staking MELT

MELT holders can choose to stake their MELT tokens and earn yields from protocol fees and mining rewards.

• 50% of the protocol fees as in H2O will be distributed to MELT Boosters (Please check more details in the Mining Boosting part).
• MELT tokens will be rewarded for the MELT stakers per day on an auto-compounding basis, and the APY could be eligible to adjustment based on community governance. The auto-compounding mechanism is more beneficial for earlier stakers and longer-term stakers.
• MELT holders can easily stake their MELT from the Farming page on the UI.
• There will be no lockup requirement for MELT stakers.

Mining Boosting

Defrost’s Mining Boosting Mechanism is a brand-new mechanism that allows MELT stakers to earn boosted mining rewards in MELT when providing liquidity to H2O.

After staking MELT in the new MELT single-coin staking contract, and depositing the SMELT (staked MELT) into the mining pool, they will be able to boost their mining APR potentially by up to 450%.

The boosting contract will also distribute H2O stablecoin rewards, collected from the protocol fees, to MELT stakers.

Roadmap

Technical Data

Token Metrics

• Token Name: Defrost Finance
• Ticker: MELT
• Blockchain: Avalanche
• Token Standard: ARC-20
• Contract:
  MELT: 0x47EB6F7525C1aA999FBC9ee92715F5231eB1241D
  H2O: 0x026187BdbC6b751003517bcb30Ac7817D5B766f8
• Token Type: Utility, Governance
• Total Supply: 100,000,000
• Circulating Supply: Updating

Token Allocation

Token Release Schedule

Token Use Case

Market and Community

Backers

Team

Updating…

Partners & Investors

Verdict

Defrost Finance protocols allow for the possibility of getting LPs from other chains. There is always the possibility of expanding outside the Avalanche network in this regard. Trader Joe and Benqi will be the first to allow consumers to stake as part of their existing liquidity arrangements, followed by Pangolin. More collaborations and hence stakeholder participation are envisaged in the near future.

Find more information:

Website: https://www.defrost.finance/

Twitter: https://twitter.com/Defrost_Finance

Telegram: https://t.me/Defrost_Finance

Discord: https://discord.com/invite/KsZcADdBym

Medium: https://medium.com/@Defrost_Finance

If you have any questions, comments, suggestions, or ideas about the project, please email ventures@coincu.com.

DISCLAIMER: The Information on this website is provided as general market commentary, and does not constitute investment advice. We encourage you to do your own research before investing.

Marshall

Coincu Ventures