Welcome to the recap of the recent CIS community call, where EVAA Protocol and bemo brought the heat on a Monday chat. We break down the entire AMA session, highlighting the key takeaways for your convenience.
In this summary: what is EVAA Protocol and how to leverage the combined capabilities of EVAA and bemo to maximize TON returns while effectively managing risks.
Part 1: What is EVAA: A Deep Dive into the Protocol
Q: What exactly is EVAA? Can you give us a deeper dive into the product?
A: EVAA is a decentralized lending protocol built on the TON blockchain. It works similarly to lending protocols crypto holders are used to on other networks. The idea is simple — traders can deposit one cryptocurrency as collateral to borrow another asset.
Let me give an example.
A user locks a TON coin on our smart contract and borrows another asset against the value of those deposited TONs. The important part is that traders retain any profits from the appreciation of TON’s price, but also bear any losses if the coin’s value decreases. But at the same time, you receive a liquid asset (e.g. stablecoins) and can further use it according to your investment strategy.
Q: How does EVAA benefit its users? What advantages does it offer?
A: EVAA offers users the flexibility to lend and borrow TON coins, stablecoins, and LSTs including bemo’s stTON.
Deposits result in passive income for users, generated through the interest paid by borrowers who use our lending services.
This model mirrors traditional financial schemes, but in DeFi, the opportunities are more expansive. One use case is to deposit volatile assets and borrow more stable assets, such as stablecoins providing a hedge against market volatility.
1) To leverage long and short positions, traders can deposit TON, borrow stablecoins, use them to buy more TON, and put it back to EVAA protocol as collateral for more assets, “looping” these actions to maximize profits;
2) Another option is to mix EVAA with other protocols, where they stake one token, receive another, and then use it as collateral for a third token, which they can invest somewhere else.
With careful planning, these strategies can lead to income growth, but it also entails higher risks as they amplify trader’s exposure to market fluctuations.
Part 2: TON Perks: Why Participation Pays Off
Q: Are there any ongoing developments or campaigns in the EVAA protocol that users should be aware of?
A: Absolutely. EVAA, much like bemo, is actively participating in the Open League initiative by the TON Foundation, which is all about getting users more involved in what’s happening in our ecosystem.
As part of this, we’re distributing rewards in stTON tokens to users who are supplying and borrowing within our protocol. Thanks to TON Foundation’s rewards, APYs can reach up to 60%. We’re all about transparency here, so you can easily check out these rates on our website.
Q: So, by simply using the EVAA app, I automatically receive stTON tokens (that by the way also accumulate income on top of them)?
A: Right, getting a bonus for just being part of the EVAA crew. The longer you keep your deposit in the protocol and the more you contribute, the more rewards you’ll earn
Q: Any estimates on how long this incentive program by TON Foundation will last?
A: There’s no specified deadline but as far as we know, the plan is to keep the program active for 3 months at least.
Q: The DeFi landscape on TON is still in its early stages, lacking the liquidity seen in more established ecosystems. In this context, the use of staked TON tokens is also limited. To motivate users to participate in TON DeFi and increase liquidity, we’ve introduced our own incentive program, dropping stXP tokens to active users. Are there any additional incentives from your side?
A: Yes, our very own incentive program is currently in the works. Similar to bemo’s approach, we’ll reward users based on their activity levels, measured through weekly balance snapshots. For every dollar borrowed and deposited, users earn a certain amount of evaaXP.
These tokens will eventually have utility, with plans for EVAA token launch in the future. To learn more about the rules and bonus amounts, users can visit EVAA.finance, and stay updated on announcements by following our social media channels.
Part 3: How EVAA’s Numbers Add Up for Users
Q: What are the average borrow rates for TON in the EVAA app currently?
A: It is a bit of a mixed bag — a blend of several rates.
When someone borrows TON for any asset, they pay an annual interest rate of 1%. These rates are changing based on supply and demand. If there’s a surplus of TON and not many people borrowing, the rates stay low. But when demand spikes, rates may reach up to 5%.
The Ton Foundation’s Incentive Program adds another layer to the mix. So, when you crunch the numbers, the final rate can actually turn negative, leading to approximately a 13% APY. In other words, users can end up earning rewards for borrowing instead of paying interest. Sounds like a win-win situation to me!
Q: Let’s look at a specific scenario: if I deposit 10 stTON tokens, how much TON can I borrow using the EVAA protocol?
A: When a trader wants to borrow assets, they must provide collateral worth more than the borrowed amount. With EVAA, you can get up to 65% of the value of your deposited assets.
So, with those 10 stTON tokens, you can borrow 6.5 TON coins. But here’s where liquid staking shines: when you stake those 6.5 TON coins back to bemo and convert them into stTON, you’ll receive 3% more than you would with regular TON. You can then deposit those extra stTON tokens back into our lending protocol and borrow even more TON. It’s a loop of leveraging your assets to get more assets.
Regarding the collateralization ratio, our protocol currently applies the 65% rule to every supported asset. However, we’re planning to customize this proportion individually for each token in the future.
Part 4: Evaluating Risks
Q: But are there any risks involved?
A: Currently, TON DeFi lacks sufficient liquidity, and TON itself remains highly volatile. Asset volatility, especially with TON, can lead to mass position liquidations.
In times of drastic price drops, the protocol needs to safeguard itself. This involves implementing a liquidation mechanism to ensure that at least 65% of the borrowed amount is recovered. This measure helps mitigate the risks associated with asset volatility and ensures the protocol’s stability.
Q: Here we should talk more about liquidations.
A: Absolutely. In the EVAA protocol, there’s a collateralization ratio that sets the minimum value of collateral required for each borrowing position. If the value of the collateral falls below this ratio, typically because of changes in asset prices, the borrower’s position becomes undercollateralized and the protocol may initiate a liquidation event.
Once the liquidation is triggered, our protocol will automatically liquidate a portion of the borrower’s collateral to repay the borrowed amount. The liquidated collateral is then sold on the open market for the borrowed asset. It’s needed to maintain the protocol’s stability and make sure that lenders are repaid in full.
Part 5: Insights From bemo x EVAA for Maximizing Returns
Q: How are market prices of assets determined? Specifically, when depositing stTON for TON.
A: For TON, we rely on data from reputable exchanges, primarily centralized, to have the most accurate market prices. In the case of stTON, data is gathered directly from the bemo’s smart contracts based on the actual supply of both TON and stTON within the bemo protocol.
By analyzing this exchange rate and the available supply data, the protocol calculates a coefficient. This coefficient indicates the expected value of stTON that can be realized within a specific timeframe.
This same price aggregation model will be applied to LP tokens that we plan to support in the future.
Q: Does it mean that the stTON-TON rate is not volatile? Will it minimize liquidation risks?
A: Exactly. This calculation helps stabilize the rate, making it less volatile compared to other assets. If your supply and borrow positions consist purely of TON and stTON, liquidation should not be a concern.
Of course, we’re setting aside smart contract vulnerability risks. Our protocol has been thoroughly tested, but despite our efforts to minimize any issues, users should acknowledge all the risks inherent in the DeFi space.
Q: That concludes our talk nicely. This is a big deal in the TON DeFi world right now, especially with liquidity being tight. It’s not just for big players, either — anyone can get in. And the best part is that it could mean some seriously high returns. Teaming up EVAA’s lending power with bemo’s liquid staking, add the Ton Foundation’s incentives — a recipe for success?
Closing Remarks
To recap, we covered a ton of ground during this AMA. Many things pitched, many insightful tidbits shared. We’re constantly cooking up more valuable content for you, so stay tuned to our socials and blog!
Get ready for the updated guide on how to supercharge your APYs by using EVAA alongside bemo. We’ll walk you through precise calculations and breakdowns of potential returns, including the impact of all incentives in cold, hard numbers.
