The latest new idea to come out of the decentralized finance (DeFi) sector is a platform that makes it easier to short crypto assets.
Beta Finance claims that the extreme price volatility for cryptocurrencies triggers instability, and harms the long-term adoption of DeFi by both retail and institutional users.
In a blog post introducing the protocol on July 8 it stated that excessive leverage, panic selling, and liquidations are all detrimental to the DeFi ecosystem, adding:
“We recognize the need for a counter-balancing force to this volatility in order to facilitate the healthy adoption of DeFi in the years to come.”
Beta Finance claims to be the first permissionless money market protocol for lending, borrowing and shorting any crypto asset. It’s the first incubated project from the Alpha Launchpad, the DeFi incubator division of Alpha Finance Lab.
Shorting DeFi assets is a complicated process that involves supplying collateral, borrowing the short token, swapping it to a different token such as a stablecoin, and managing the positions. Then a close on the short position needs to be initiated before calculating the amount of short token needed for repayment, before swapping again to repay the debt.
The Beta Finance platform will provide a dashboard to simplify this process for users. All they will need to do is supply collateral, decide the amount of an asset they want to short, and confirm the transaction.
“By providing critical short tooling, which facilitates market stability, and empowering users with creating money markets, Beta Finance is focused on its mission to improve DeFi infrastructure and further its mainstream adoption.”
The protocol is promising yields as high as 1,000% on some tokens though it did not specify which ones. There was no official launch date and no mention of a native token though there is likely to be one.
DeFi TVL stable
Collateral locked in DeFi protocols has remained stable despite the crypto market decline this week. The total market cap has shrunk by almost 6% since July 5 as around $90 billion has exited the space.
The total value locked is currently sitting around $85 billion according to DappRadar. It has hovered around this level since its fall from a peak of $140 billion in mid-May.
Aave remains the market leader with $8.3 billion in total lockup, followed by Uniswap and Curve Finance.
DeFi tokens themselves started to rebound earlier this week, but most of them are in the red again today.