Ratio Finance, a decentralized finance platform on the Solana blockchain, recently raised $2.25 million in funding from its major investors, including Rarestone Capital, Solana, Raydium, and Divergence Venturers.
The funding comes after Rarestone Capital took the De-fi protocol under its Rarestone Lab’s wing. Rarestone Labs helps new startups to attract capital and get product traction in today’s ever-competitive Defi world.
What is Ratio Finance all About
Ratio Finance is looking to diversify options for leveraging LPs in the Solana ecosystem. The protocol will create collateral debt positions for Solana ecosystem participants. This will allow them to use their LP tokens as collateral for loans.
Ratio Finance will make this possible by creating Ratio USD, USDr — a stablecoin that is backed by real collateral. The USDr concept is similar to Maker DAO’s use of DAI as a stable coin.
Currently, providing liquidity on Raydium — Solana’s automated market maker — only earns a user Raydium and other tokens.
However, with USDr, Solana participants will have more incentives for depositing LP tokens — which should also help attract more liquidity to the platform. For instance, users will mint USDr once they have locked their collateral liquidity tokens into Raydium or other Solana’s DEX such as SolFarm. Even better, users will be able to deposit the earned USDr into Ratio Finance’s vaults or stable-swaps where it will generate yield.
Users will use the yield to mint more USDr and lock more liquidity on Raydium. Better yet, it will help users to pay off loans on the platform.
So what about the downside risk?
Ratio Finance also has a risk assessment protocol with advanced risk parameters that assess LPs’ true risk. What’s more, Ratio Finance redeploys collateralized LPs into yield-bearing platforms for optimum yield efficiency. On the other hand, Ratio Finance will enhance the liquidation on the Solana ecosystem by liquidating all its vaults. This will come handy in the event of undercapitalization.
The Ratio Finance Token
According to Ratio Finance roadmap, the protocol is also planning to launch its native token, Ratio. Users will be able to obtain Ratio either by providing liquidity in the Solana ecosystem or performing well as vault managers. You’ll also trade it on exchange platforms. The token will be used as a governance token and to pay fees in the Ratio protocol.
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