Issuaa és alacsony kockázatú, magas hozamú gazdálkodás

Protocols that create assets pegged to other asset prices face a certain challenge at some point. That challenge is ensuring the protocol remains solvent if the assets’ prices shift by holding sufficient value at any time. Many synthetic asset protocols solve this issue by locking up a well-established cryptocurrency or their own token as collateral. However, the problem is that big fluctuations usually affect multiple assets simultaneously. With cryptocurrencies, those fluctuations can be quite heavy, turning collateral into a potential liability. Another factor is that all real-world assets are now traded around the clock like crypto. Therefore, there are outdated prices and considerable price gaps, all resulting in heavy over-collateralization needed in currently avaliable protocols like Synthetix or mirror.

This approach creates an imminent risk of liquidation, in addition to lowering the ROI. Collateralization ratios in such structures can often exceed 200% just to avoid that outcome. And that still leaves us with gas fees to pay.

Issuaa solves this problem by issuing synthetic assets in pairs. When assets are minted on the ISSUAA protocol, the user trades a fiat-pegged stable coin for a pair of synthetic assets. The long token mirrors the asset’s value while the short token reverse-mirrors it. Whenever the asset’s price drops, the long token also drops while the short token gains value. Therefore, the pair’s combined price remains static relative to the asset it’s pegged to.

With this Issuaa solution, you can have double the assets for the same amount of collateral or even less. The same starting capital gives you much more in the liquidity pools than most protocols. Another benefit of the twin-token system is a reduced risk for liquidity providers. Liquidity providers typically face great price-related risks, but long and short tokens reduce this risk. Even when the price drops by 70%, the liquidity provider’s loss will not exceed 10%. And even that would likely be compensated by the trading fees.

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Source: https://issuaa.medium.com/issuaa-and-low-risk-high-yield-farming-74c004070d26?source=rss——cryptocurrency-5