Warp Finance is an open-source protocol on Ethereum that is creating a novel use case for unused Liquidity Provider (LP) tokens by allowing them to be used as collateral for borrowing. The platform consists of two important components:
Borrowers: Users will be able to deposit LP tokens onto the Warp platform and receive stablecoin loans in exchange, while simultaneously earn trading fees from Uniswap. Currently the platform offers Uniswap and Sushiswap LP pairs. These pairs will be deposited at 150% over-collateralization and let borrowers then obtain a stable coin loan of DAI, USDC, USDT or sUSD at a specific interest rate. If the value of collateral dips below the 150% collateralization threshold the liquidation process begins and users of Warp are able to liquidate these positions.
Lenders: Lenders will be able to supply DAI, USDC, USDT and sUSD on Warp Finance in exchange for either wDAI, wUSDC, wUSDT or wsUSD, which are interest earning tokens that specify a deposit into Warp Finance platform. Upon successful withdrawal, suppliers will receive back the stablecoin they initially deposited with the addition of interest earned.
Warp Finance’s protocol token, WARP, is used in liquidity pools and governance of the protocol.
How to use Warp Finance?
Warp Finance can be accessed on [app.warp.finance, https://app.warp.finance/]. After connecting your Ethereum wallet, you are able to access the platform and can start to lend or borrow your tokens.