Mainframe has announced the re-launch of its lending protocol after it acquired Sablier, an Ethereum blockchain-based protocol for real-time finance.
The design of Sablier’s protocol known as money streaming is for continuous sending of payments through Ethereum blockchain.
The Mainframe team plans to utilize Sablier’s technology for the development of a new DeFi product in the form of low-collateral bonds. Likewise, Sablier founder Paul Razvan Berg will join Mainframe as the head of development.
The announcement suggests quick development of the DeFi market, as well as the manner in which consolidation can influence innovation in the highly fragmented cryptocurrency market.
Cryptocurrency loans are capable of creating a healthy cycle of speculation, spending and monetary circulation. Nonetheless, current overcollateralized systems do not offer borrowers much exposure. Usually, loans backed by cryptocurrency need collateralization rations of 150 percent or more, and there is no need for borrowers’ full actualization of their spending power.
Lower collateralization ratios can be achieved with Mainframe’s novel Guarantor Pools which provides protection for collateral vaults, even without putting the system at greater risk.
Mainframe has proposed a new zero-coupon bond system allowing borrowers’ quick debt offloading for more buying power. People can likewise interact with the protocol as guarantors, allowing the pooling of assets towards protecting the system from becoming undercollateralized.
Borrowers’ failure to meet the collateral requirement makes guarantors to earn income from fees and purchase collateral at a discount. The design of Mainframe’s system is such that its protocol is impenetrable to liquidation failures, the kind that happened to MakerDAO on March 12 and 13 which led to the loss of 5.67 million DAI.
Generally, the system comes up with greater incentives for the stimulation of the flow of funds and achieving greater capital efficiency.
Mainframe hopes to strengthen the bridge between real-world use of cryptocurrency through the provision of more practical and predictable lending and borrowing solutions.