SushiSwap aspires to have a broader nett of margin assets than independent DeFi lending sites.
Exchange that is decentralised SushiSwap has announced the “rolling rollout” of two new products: Kashi, a specialised lending platform designed exclusively for margin trading on the exchange, and BentoBox, a dual-purpose yield vault.
Kashi intends to let traders borrow assets to create leveraged long and short positions, similar to other lending platforms such as Compound or Aave, and BentoBox would enable users to gain interest from farming liquidity pools while also contributing to lending pools using the same tokens.
SushiSwap CTO Joseph Delong claims that SushiSwap’s Kashi strives to be more specialised than other lending protocols, allowing for a broader range of properties to be borrowed. It accomplishes this by isolating risk between individual lending pairs, which ensures that a decrease in the valuation of one asset would not affect all positions on the network. While users depositing an asset on other loan sites can use it as collateral to borrow another asset listed, Kashi uses separate lending pairs. A customer who deposits Ether (ETH) into a vault containing Wrapped Bitcoin (WBTC) will be able to borrow only WBTC and not other properties.
“Kashi is an isolated lending pair market. The reason most lending protocols are naturally conservative with the addition of collateral and borrow tokens is that the risk is pooled across the entire pool,” said Delong. “[…] With isolated lending pairs the collateral and borrow tokens are pool specific. So in the event of a failed liquidation only that individual pool risks insolvency.”
Delong predicts that this will be a “AMM moment for lending,” in which consumers will be able to “individually identify markets that they deem necessary,” greatly increasing resource availability across the lending industry.
Because of the isolated risk profile, Kashi will incorporate far more assets at much higher risk than other networks, allowing for shorting on a diverse range of crypto assets. The right to short an asset will significantly improve market liquidity by allowing traders to freely articulate their view on the asset’s price and promote derivatives such as futures and options. Kashi also provides flash loans, immediate and unrestricted loans that do not exist unless repaid within the same block. While Kashi V1 contains a pre-built list of lending pools, the V2 release in a few weeks should enable everyone to build their own pairs.
Non-traders can receive yield on their investments through the Kashi lending network through BentoBox, which serves as Kashi’s pocket. Users can blend yield sources by collecting payments from SushiSwap vendors, Onsen liquidity mining incentives, and interest rates charged by Kashi users.
BentoBox and Kashi have been in the works for quite some time, with the first announcement coming in September 2020, shortly after the launch of SushiSwap. According to its GitHub website, PeckShield and Quantstamp initially audited Kashi, but the “thoroughness wasn’t overwhelming.” The SushiSwap team then worked on building an operational checklist and achieving 100% test coverage. Certora has already done formal contract testing, which helps them to mathematically prove that the programme behaves as expected.
SushiSwap core team member 0xMaki shared enthusiasm for the rolling launch, stating that new features would be available shortly.
“The community has been awaiting this moment since October we are today just releasing the first version of a product that will evolve on a rolling basis you can expect a lot coming next from Sushi,” he said. “I strongly believe we were able to assemble one of the most passionate teams in DeFi. Our product pipeline is so filled we had to put Certora on a 3mo retainer for all our SC needs.”
Kashi is one of the first major implementations of SushiSwap’s 2021 roadmap, which seeks to expand the exchange’s reach beyond a pure automated market maker network. This is a further departure from the project from which it forked, Uniswap, whose V3 release concentrated on changing the liquidity provision mechanics of its AMM.
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