ILMs 102: Key Differentiators and A Leap Forward for Base DeFi

Table of Contents

· Summary/TL;DR
· Introduction
· Re-hashing the Benefits
· Key Differentiators
· Conclusion: Wrapping Up
· FAQs

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Summary/TL;DR

• Seamless Protocol has introduced Integrated Liquidity Markets (ILMs), enabling secure and efficient borrowing and lending solutions.
• ILM technology leverages Seamless’s capital pools to offer benefits such as: superior rewards, cost efficiency, and automated management.
• The inaugural Lido wstETH/ETH ILM emphasizes auto compounding and low costs, with the potential for higher multiplication loops such as 20x.
• Compared to other similar DeFi platforms and offerings, Seamless ILMs stand out with their transparent fee structure and optimized growth strategies.

Introduction

Continuing the exploration of Integrated Liquidity Markets (ILMs), ILMs mark a key paradigm shift for DeFi with several key differentiators.

*For a primer to this post, please read Part 1, ILMs 101: Automated growth strategies to magnify your rewards to follow along in this series.

As a recap, Seamless is an innovative DeFi protocol on Base and a top native lending & borrowing protocol in the ecosystem. Seamless’ one-stop-shop design and yield auto-compounding powers safer, simpler, more efficient borrowing/lending.

Re-hashing the Benefits

ILMs are integrated smart contract strategies that utilize Seamless’s capital pools with better rates to maximize rewards.

To delve deeper into these benefits, let’s analyze the attributes of the recently unveiled wstETH/ETH 3x Looping ILM:

1. Growth strategy (looping): The inaugural wstETH/ETH ILM introduces a straightforward “looping” growth strategy, maximizing user rewards. This approach offers ETH enthusiasts increased exposure to the real yields generated by DeFi’s most renowned LST project (Lido’s wstETH).
2. Auto compounding: ILMs seamlessly automate the compounding of user positions, offering a substantial advantage over non-compounded positions, particularly over extended periods of time.
3. Automated management: In response to fluctuations in collateral value, ILMs facilitate smooth position management through rebalancing mechanisms. This automated process mitigates the complexities associated with chunky liquidations, saving users significant time and effort. (Hours and hours of time back to users!)
4. No hidden or extra fees: Unlike many platforms riddled with hidden fees, complex fee structures and third party fees, Seamless ILMs are directly integrated into Seamless Lending Pools, and do not incur any management or extra platform fees. This transparency and cost-efficiency are rare within the DeFi landscape.
5. Low cost: Rebalancing and adjusting positions incur costs, such as gas fees, which are mutualized across Seamless ILM users. This collective approach ensures that costs are distributed amongst the entire user base, significantly reducing individual expenses. (For illustrative purposes, imagine one transaction with a $2 gas fee split by thousands of users, versus thousands of individual transactions borne by each individual user).
6. Capital efficient: Leveraging the onchain and transparent nature of Seamless ILM smart contracts, users can access rates and parameters previously unavailable to non-trusted entities. This enhanced capital efficiency enables access to higher leverage and looping opportunities, up to 20x in the future, an amount that is unattainable on other platforms.

Key Differentiators

Three Key Takeaways

1. Auto compounding and automated management is not an industry standard yet — but Seamless ILM’s make them so!
2. When comparing DeFi platforms, fee structures are a critical consideration. Unlike competitors such as DeFi Saver, InstaDapp, and SummerFi, Seamless boasts a clear and transparent fee policy. While gas and trade slippage fees still apply, users benefit from no hidden or additional platform fees, ensuring fairness and transparency in transactions
3. Seamless excels in capital efficiency, particularly when contrasted with the platforms outlined above. Through the ILMs, Seamless optimizes Loan-to-Value (LTV) and collateral ratios, granting users access to higher leverage and looping opportunities that can reach 20x. Conversely, other platforms rely on third-party protocols, such as AAVE or Compound, to power their offerings. This means those platform’s strategies lack Seamless’s level of capital efficiency due to adherence to underlying protocol parameters, ultimately limiting user leverage.

Conclusion: Wrapping Up

The launch of ILMs on Seamless Protocol represents a leap forward in DeFi innovation. By combining superior rewards, cost efficiency, and automated management, ILMs offer users unparalleled benefits. In comparison to other platforms, Seamless ILMs take a user-centric approach to excel across all key differentiators, positioning Seamless Protocol and its community as leaders in secure and efficient borrowing and lending solutions within the DeFi landscape. But this is only the start! More ILMs and other capital efficient innovations are currently under development by the community. Learn more or contribute to the future of DeFi by checking out the links below.

*To learn more about ILMs auto compounding native, keep reading the Introducing ILMs blog series with ILMs 103: The Power of Auto Compounding and Capital Efficiency

Ready for the next step? Get started with ILMs HERE.

FAQs

Q: What are the exact fees for each of the platforms mentioned?

A: Seamless — No platform or hidden third party fees! It’s that simple! Gas and trading slippage fees apply.

Defi Saver — Has an extremely complicated fee structure. 0.1% — 0.25% fee taken trxns that involve swaps. 0.05% amount on trxns where no swap happens. Automated adjustments have 0.25% fee AND an additional 0.05% automation fee per adjustment. The recipe creator has a sell action has a 0.25% service fee. The advanced claim and resupply options include a 0.25% service fee. Gas and trade slippage fees apply on top of this. This is just to name a few!

InstaDapp — There are fees for both looping related InstaDapp products. InstaDapp Pro charges a .05% fee on the total flashloan size, which is opaque and requires manual calculation which could be difficult for some. InstaDapp Lite takes a HUGE 20% fee on yields. Gas and trade slippage fees apply on top of this.

Summer Fi — Also a complicated fee structure that varies wildly between different strategies and vaults. For a similar stETH strategy, a 0.07% AuM fee charged every time you adjust or close the position. For general Multiply strategies, 0.2% size of trade in each trxn. Gas and trade slippage fees apply.

Seamless Protocol is the first decentralized, native lending and borrowing protocol on Base. Seamless lays the foundation for Modern DeFi, focusing on lower-collateral borrowing and a better user experience to inspire the masses.

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