Stabilizers can provide leverage for on-chain DeFi strategies.
The DeFi strategy is a vault or a custom-programmed strategy that implements the iAsset interface in a smart contract. The smart contract will invest, hold the resulting tokens or accounts as collateral, and divest.
The stabilizer partners with a single borrower that decides when to borrow and deploy the strategy.
Borrowers can build their own strategies, or apply to manage a strategy that the funding protocol has developed in house.
Borrowers can borrow and repay at any time. They should be motivated to borrow when they think they can make a spread over the cost of funding
The protocol and the Stabilizer have the right to ask for repayment at any time.
- Funding protocols will use this right to force repayment when savers are reducing funding
- Stabilizers will use this right to liquidate if losses bring the junior tranche equity below a the minimum requirement
Borrowers can remove reward tokens and other assets if they satisfy the required equity ratio, assuming the "other assets" are worth zero. This gives them a simple way take out assets that are difficult to trade in the automated strategy.
Maxos will provide code for an asset that invests in a specific token and can offer it for liquidation..
DeFi strategies can provide 24/7 liquidity (investment and divestment). They are useful for staying fully invested when money is coming in or going out. They can improve returns during times when risk-adjusted DeFi yields are better than off-chain yields. They provide a way to partner with borrowers that have customized strategies.
Stabilizers partner with a single wholesale borrower for each strategy. This simplifies the work of the DeFi DAO by getting focused design and attention from a dedicated partner. Stabilizers can support customized terms.