The MELD protocol is building the core DeFi infrastructure on Cardano by offering a list of services at the heart of Decentralized Finance.
MELD provides infrastructure for wrapping or MELDing assets from other networks and having their permissionless version on Cardano. The initial scope of those assets includes the following list and, later on, expand to assets from other chains.
MELD offers both centralized (integrated with the real world fiat) and decentralized lending.
AMM with single-sided liquidity and impermanent loss protection. MELD vaults offer Automated Market Makers (AMM) with the possibility for a single side exposure to an asset. Those pools will also have impermanent loss protection.
Also, the IL (impermanent loss) protection will be done by the protocol and funded by protocol participants (explained further in this document).
The function of the protocol insurance pool is twofold:
- Protect protocol lenders in case of cascading liquidation and in case some collateral is sold below the loan value.
- To compensate users in case of impermanent loss on the AMM protocol
To achieve that MELD token holders can stake their tokens in the Vaults. Those funds can then be used to compensate lenders and AMM LP providers. In order to compensate insurance pool participants for the added risk which they are taking, MELD will distribute 40% of all fees collected on the protocol to them.
Users will have the option to stake their MELD tokens with or without duration. Users who stake with duration will receive a multiplier on their reward share, identical to the one described in the governance section of this document.
Regardless of stake duration, there is a 7 day cooldown period when users request to unstake. During the cooldown period, the MELD tokens are still available to the insurance pool. This is done to avoid “run on the bank” situations when an insured event occurs.