Overview
Amulet Finance is designed to address the challenges of capital efficiency and risk in the Cosmos DeFi ecosystem. By allowing users to obtain loans based on their future staking rewards and DeFi yields, Amulet Finance aims to enhance the liquidity and usability of staked assets. It also proposes a solution to the high-risk leverage strategies commonly associated with crypto assets, especially in volatile market conditions.
Functionality
Stake and Advance Model
The core feature of Amulet Finance is its ‘Stake and Advance’ model. This model comprises two primary functions:
- Stake: Users can deploy crypto assets via smart contracts to generate PoS rewards.
- Advance: Users can mint loans termed “Advances,” worth up to 50% of their staked asset’s value. These loans are provided in the form of ‘amAssets,’ synthetic assets treated as equivalent to the original assets by Amulet’s smart contracts.
Financial Ecosystem
Amulet’s financial structure includes a system of reserves and a treasury. The reserves, replenished by the yields received post-fees, are designed to maintain liquidity and stability. The treasury is funded by various interaction fees and supports the protocol’s security and operations.
Risk Management
Amulet addresses risks through comprehensive audits and a transparent, open-source approach to its smart contract code. The protocol has plans in place for scenarios where strategies yield zero returns or experience failures, ensuring the safeguarding of user positions and protocol stability.
Launch and Ecosystem Integration
Amulet Finance is set to launch on the Neutron blockchain, aligning its technical capabilities with Neutron’s support. Its mission includes leveraging the staked capital on CosmosHub, focusing on unlocking the potential of approximately 70% of staked ATOM. The protocol has received support from the ATOM Accelerator DAO and the Interchain Builders Program.
Governance
The governance of Amulet Finance is centered around holders of the AMLT token, who, upon locking their tokens, gain governance rights within the protocol. This structure allows for decentralized decision-making and community-driven development.
Potential Impact
Amulet Finance aims to increase the utility and security of the Cosmos network by enhancing capital efficiency. It also seeks to reduce sell pressure on ATOM and other native tokens by providing alternative liquidity options.
Risks and Challenges
Amulet Finance faces challenges typical to DeFi protocols, such as smart contract vulnerabilities and the potential for strategy failures. It also must navigate the complexities of cross-chain interactions within the Cosmos ecosystem.
