Supply

🚰 Introducing a new kind of Liquidity Pools

💧𝗨𝗻𝗱𝗲𝗿𝘄𝗿𝗶𝘁𝗶𝗻𝗴 𝗟𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗣𝗼𝗼𝗹s💧

Anyone is now able to deposit USDC to start earning proportional share of fees generated from interest paid by the borrowers on DeFrag.

Why ULPs?

ULPs automate proportional tracking of USDC deposits & fees earned, opening up the floor for anyone to become an underwriter

How does it work?

1. Navigate to DeFrag Supply Page: https://defrag.fi/assets/supplying

2. Choose the collateral asset you would like to back.

3. Approve USDC for use in the ULP contract & deposit your desired amount.

4. Once you supply USDC, you will receive ULP tokens (wrapped USDC) in return which track your pool share.

5. Redeem your ULP tokens to withdraw USDC deposited + any fees earned.

CAUTION: available liquidity for withdrawals varies depending on utilization of the assets' underwriting pools. For example, if you deposit 10,000 USDC into a pool which has 0 available liquidity for borrowing and someone comes in and borrows 5,000 USDC - you will only be able to withdraw 5,000 USDC until that borrower pays back the loan or another liquidity provider deposits 5,000 or more USDC into the underwriting pool.

What are the risks?

As with any new DeFi primitive, there might be unforeseen economic vulnerabilities. Please use it at your work risk.

It's worth noting: Before opening up underwriting liquidity pools to the public, we wanted to make sure our model was worked in production. All the USDC underwriting liquidity until the ULP launch (3/24/2023) has been manually provided by our core team, earning an average APY of ~45% in fees from borrowers!

If you want to get more information on providing liquidity on DeFrag you can join our discord: https://discord.gg/defrag.