In this Space we were joined by Sam from Liquity, and Bio from Orki, to celebrate the launch of Orki on Swellchain, as well explore some of the opportunities available with $USDK – Swellchain’s native stablecoin.
In case you missed it, here are the top questions from the event.
What is Orki?
Orki is a permissionless stablecoin and credit protocol on Swellchain with a focus on the staking and restaking economy. Orki allows anyone to borrow $USDK, our native stablecoin, using their staked and restaked assets while preserving their staking rewards with their collaterals.
– Bio, Orki
Which collateral types will Orki support?
Orki currently supports five collateral tokens, which includes, ETH, Swell’s LST (swETH), LRT (rswETH), and token (SWELL), as well as Etherfi’s weETH. There will also be a lot more opportunities coming soon.
– Bio, Orki
How do you see Orki fitting into the existing Swellchain ecosystem?
The big unlock here is being able to mint a stablecoin off the back of a yield bearing asset, which is not just vanilla staking yield but also retaking yield. On top of restaking yield, you have AVS incentives that will probably come within the next couple of months, so you can free up capital and use that throughout the ecosystem.
It's unique in that, yes you can apply the Liquity V2 model to any collateral asset, but here you’re using an objectively better yielding asset and I think it's exciting to see it play out.
– Kilian, Swell
How have CDPs evolved since Maker, and why is Liquity V2 a superior model?
CDPs kind of evolved from this one size fits all model to more dynamic modular systems, especially with V2. Maker deduced the concept of over collateralized stables, but one of the differences with Maker vs Liquity, is that their rates are set and uniform across all users. This is not ideal because what we’ve seen can happen is that every few months, depending on market conditions, the rates change and borrowers have no control over their interest rates, meaning they’re also subject to the volatility of rates.
With the V1 model, we changed this fixed one time fee, which in that time when it was a low interest environment worked quite well because we could borrow for cheap compared to the competition. However, we realised when interest rates changed and interest rates were high across DeFi, that low interest rate model was not scalable.
With Liquity V2, we feel that we've found a good balance between scalability and decentralization, where we now have a model where borrowers set their own interest rates so people, depending on their risk profiles, can adjust the rates they would like.
Borrowers can also have multiple positions open with different interest rates, and there is now a direct link between what borrowers pay for their debt and what lenders or stablecoin owners can earn, as there is a direct 100% protocol revenue flow between borrowers to lenders with Liquity V2. This means there should always be demand for holding the stablecoin, because the stablecoin receives the yield that borrowers pay.
This direct revenue flow is quite a change from the likes of Maker, and also from the likes of other money markers that have created stablecoins, which would make it a very modular design that scales as time goes on.
– Sam, Liquity
How does Liquity V2 architecture allow for risk for the different collateral types?
Liquity V2 has been immutable since day one and we have three collateral types, which includes ETH, Rocketpool’s rETH, and Lido’s wstETH.
Those are the three that will forever be in place as long as Ethereum is alive. The cool thing about V2 is that all of these collateral types will have their own stability pool, which is our liquidation mechanism, and also an interest rate market that corresponds to each of them.
This means that the risks of one collateral will not spill over to another collateral type. This modularity hopefully ensures that there's clear risk segregation for the users and for the protocol.
– Sam, Liquity
What made Liquity V2 decide to support multiple different collateral types?
We received a lot of feedback from our users when we launched Liquity V1 which got a lot of traction, and then a year or two later, we had Lido and Rocketpool come into market, and now we have Swell and other restaking protocols. There was a demand from our users to support assets that provide capital efficiency, where they can still earn yield over their staked assets.
We wanted to broaden access to borrowing while also keeping that ethos of decentralization as we believed that by increasing access to two more collateral types, we could increase options by tapping into other LSTs, while also keeping that decentralization core that we have.
– Sam, Liquity
What other integrations are coming for Orki in the Swellchain DeFi ecosystem?
We currently have $SWELL incentives flowing for $USDK, which includes holding the stablecoin on Swellchain or LPing in one of the pools currently set up on Ambient.
Following Ambient, we will also have integrations going live with Velodrome, Euler, and more.
– Abi, Swell
We are working on integrations with vaults, and some other leverage products which will come soon. As for ecosystem integrations, we will have API point distributions, along with others that will be disclosed at a later time.
– Bio, Orki
What are Orki Drops?
Drops is a points system that was designed with one of our partners, Metrom.
Drops give you early access to $ORKI tokens that will be available from TGE. During this initial campaign, you will be able to earn Drops by doing activities such as borrowing, staking, LP’ing as well as helping spread the word about Orki.
– Bio, Orki
Are there any upcoming developments happening at Liquity that you can share?
We currently have ‘forks’ which reward BOLD users by incentivizing core use cases such as the main liquidity pools and the V2 stability pools on 15 different chains – so we’re going to incentivize users between their stablecoin and ours.
BOLD will hopefully be on Swellchain soon after launch which we’re excited for.
On the Liquity side on mainnet, we will soon have a couple of yield bearing variants of BOLD, including sBOLD and yBOLD, built by K3 Capital and Yearn respectively, which keeps the yield that the protocol generates. On top of that you also can earn fork rewards from the different forks that have the mandate to reward usage of BOLD.
– Sam, Liquity
What trends are you seeing in defi at the moment that you're excited about?
I'm excited to see AI growing with stablecoins and optimizations. I think that its yield centric mentality is coming into play more, and people will have more efficient ways that have less work and more ultimation in their lives.
Also, many people got away from DeFi because of the volatility of loss, and I don't see many people preaching stablecoins as the place to start for beginners – I would like to start doing that more.
– Bio, Orki
The biggest trend we’ve seen is ETH changing the downward trend to an upward one.
I'm excited about what AI has coming in this space, as I think AI is good at fixing information asymmetry in crypto. Crypto is a rapidly expanding space with many different chains and VMs launching every day and every week, and it's hard to keep track of for the average user. I think AI can fix a lot of that information so users can get easier access to better yields.
– Abi, Swell
Very keen to see how these yield bearing stablecoins go. With Liquity V2 yield bearing stables, you actually get a stablecoin that is only backed by ETH, rETH or wstETH, which are all robust and decentralized.
– Sam, Liquity
Thanks to everyone who attended the event!
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