Decentralized Finance equals innovation, everybody knows it. Day after day, new products come into the market with different approaches to make users’ lives easier.
Today, with the high number of protocols and different DEXs available across the blockchain world, users surely want some strategy or a special way to make them earn the best yield possible in as many exchanges they can deal with.
Idle solves this problem very quickly, by creating a platform to maximize yields across multiple protocols, so users do not have to switch funds from one place to another all the time.
How Does It Work?
Idle works as a decentralized rebalancing protocol, allowing users to manage their digital assets allocation automatically among different third party DeFi protocols (Ethereum money market).
The platform is 100% automated, working algorithmically to rebalance assets allocation and to make it possible for users to earn the best yield possible.
Users can choose to maximize their interest rate returns using the “MaxYield” strategy or to minimize their risk exposure using the “RiskAdjusted” allocation strategy.
Idle allows users to connect with Compound, Aave protocol, dYdX, Fulcrum, and DSR. The tokens supported by the platform are DAI, USDC, and USDT.
Security is an essential concern for the team behind the project. Products will only connect to protocols that are fully audited by top-notch security firms. These protocols also must be “battle-tested” by the blockchain hustle itself, with respectable reputation amid the market and digital assets locked.
Understanding the Process:
First, the user starts by building his portfolio with different allocation strategies, aiming to maximize his returns while balancing the risk involved in the operations.
The user then proceeds to deposit the amount of stablecoin, so the magic starts to happen.
The platform automatically keeps the appropriate allocation mix among assets, following a pattern designed by the strategy chosen previously.
Idle uses algorithm-based technology to always check for better yield-earning opportunities across the protocols, doing it consistently and efficiently.
With all these steps completed, the user now just has to monitor his funds and the rebalance events, so he can see his estimated earnings and quickly redeem back his funds accrued by so precious earned interest.
Dig into It:
Users supply capital for lending as a part of the platform’s non-custodial smart contracts pools. Thus, the rebalance process happens automatically in the pool’s current allocations to achieve optimized interest rates.
Some may be curious about the rebalance calculation. We can explain it: rebalance calculation is done by accessing the total assets available within a certain pool, adding up underlying protocol rate functions and supply/demand levels, to finally determine an allocation that has the optimal interest rate possible after the rebalance happens.
The platform has native tokens, called IdleTokens (ERC20 standard). They represent the user’s balance within the protocol, added up by interest accrued over time.
As a specific pool within the platform earns interest, its’ IdleTokens get convertible into an increasing amount of the underlying asset.
Idle is completely non-custodial, so users’ digital assets are sent to smart contracts beyond the platform’s control. Only the user has access to his funds, as the smart contracts accept a concept of “accounts”.
These specific “accounts” have certain balances for each crypto asset, which are lent out to underlying protocols (Compound, Aave, etc.).
When users want to withdraw, the smart contracts automatically interact with these protocols, allowing digital assets to be routed directly to users’ wallets.
Who Is Behind the Idea?
The project has its roots on Italian soil, where co-founder Matteo Pandolfini (financial/business developer) joined his two colleagues, William Bergamo (veteran blockchain developer) and Samuele Cester (full-stack developer) to make the idea come to reality.
Bergamo was the first one to meet ETH in 2016, but the DAO hack events that deeply affected the blockchain community made him wait for a while before starting a crypto-based project.
In 2017 things were calmer and he came back, working on several projects before joining his long-time mates to establish Idle.
A brand-new fresh idea when it comes to easy the digital assets management process, Idle is a non-custodial decentralized rebalancing protocol.
It gives users the possibility to manage their digital assets allocation automatically across different DeFi protocols, such as Compound, Aave, dYdX, and others.
The platform allows users to build their strategies and see it working while their assets accrue optimized interest rates across different protocols, all automatically and algorithm-based, so they just have to monitor and withdraw their ever-increasing funds whenever they want.