As a highly-anticipated L2 public chain, Optimism is the first Ethereum Layer 2 Chain developed and deployed with EVM-compatible Optimistic Rollup. Optimism runs in parallel with Ethereum, processing transactions more efficiently and reducing gas fees to a minimum without sacrificing Ethereum security.
Due to the slow confirmation speed and high gas fees, some smart contracts that require high-frequency operations cannot be deployed on Ethereum. Optimism makes up for the shortcomings of Ethereum. Coupled with large-scale airdrops to early supporters and support for the ecosystem, Optimism has attracted a large number of users and developers to pay attention and participate.
The Optimism ecosystem has undoubtedly experienced an explosion, with projects in multiple fields, including NFT, DeFi, GameFi, infrastructure, DAO, cross-chain bridges, etc. Among them, the number of projects in the DeFi field alone listed on the official website has reached more than 200. The prosperity of the ecosystem has greatly improved the scalability and composability of the Optimism ecosystem, and more innovative projects are being developed and built on Optimism.
About Extra Finance
Extra Finance is a decentralized lending and automatic compound leveraged yield aggregation protocol based on Optimism. Extra Finance will first integrate the mainstream Dex Velodrome in the ecosystem, and is the first full-featured leveraged yield enhancement protocol based on Velodrome. Uniswap V3, Beethoven and other mainstream Dex are also in the later planning. Extra provides users with a variety of products such as lending, farming with up to 3x leverage, long/short, neutral strategy, strategy Vault, etc. Users can pledge LP in Extra and increase their income several times without frequent active management, or deposit assets in the lending pool to obtain risk-free and stable income.
At present, the Extra Finance testnet has been launched, and a testnet activity has been launched on Galxe. Participating in the test and completing tasks will earn you testnet OAT. OAT holders may receive potential incentives, such as airdrops, whitelists, or OG. (Details at the end of the article)
Leverage + reinvestment to increase returns several times
Every liquidity provider hopes to get higher returns. Extra Finance's mission is to meet the needs of liquidity providers and maximize LP returns by using leverage and reinvestment strategies with the lowest risk.
Let leverage be a tool
It is common to see big Vs and KOLs reminding new traders not to use leverage, which is indeed a very practical advice for traders. But in fact, leverage is not a scourge, nor is it as dangerous as imagined. In some scenarios, the rational use of leverage can increase capital efficiency several times. Especially in DeFi's yield farming, leverage can maximize the limited funds and increase returns to new heights.
In Extra, leverage becomes a tool to increase profits, bringing positive utility to users. Extra provides users with up to 3x leverage. Users provide funds as collateral and borrow more funds through the protocol's lending market to expand the scale to three times the principal. As shown in the figure below, the APR of WETH/USDC is 92.5%. The user provides 100USDC of funds, sets the leverage to 3x, borrows 200USDC, and pays a lending rate of 37.6%. After investing a total value of 300 USDC in LP, the APR directly increases to 278%. The principal has not changed, but the leverage provided by the protocol has been borrowed, and the income has directly increased from 92.5% to 278%.
Flexible position settings
Extra provides users with multi-dimensional and flexible position settings. Users can provide any amount of any token included in the LP. For example, in the WETH/USDC LP pair, users can provide USDC or WETH alone, or provide both tokens at the same time, and there is no need to maintain a 1:1 ratio.
Users can also customize the leverage ratio between 1x and 3x, and borrow one or two assets at the same time. They can also freely set the ratio of borrowed assets, and by allocating the proportion of borrowed assets, they can implement long/short or neutral strategies to further increase potential returns.
Long/Short and Neutral Strategies
The crypto market is a highly volatile market, and volatility brings risks as well as opportunities. Thanks to Extra's flexible position setting function, long/short and neutral strategies can be implemented through reasonable settings, allowing users to gain additional benefits in market fluctuations.
When setting a position, if you borrow a currency, it is shorting. When the price falls, the funds required to repay the debt will be reduced. If you buy and hold a currency, it is longing. When the price rises, you will get more profit. For the same currency, if the amount borrowed and held is equal, that is, the amount of shorting and longing is equal, it is a neutral strategy.
Market fluctuations are often difficult to predict, and neutral strategies reduce risk exposure to 0, making them the best choice for leveraged yield farming. However, as prices fluctuate, leverage may tilt, requiring users to frequently check leverage and rebalance to keep the number of borrowed and held non-stable tokens equal.
Automatic reinvestment
I believe everyone knows the power of compound interest. Extra adopts an automatic reinvestment strategy, automatically claiming profits every fifteen minutes and rebalancing to add LP to the original position. The position value continues to rise, and the income continues to rise, thus achieving automatic compound interest. In this process, users do not need to actively manage, just open a position in Extra.
Participate in testnet activities to receive OAT
The Extra Finance testnet was launched on March 23, and the testnet activity was launched on Galxe at the same time. The activity will last from March 23 to April 12, with a total of 3,000 badges, first come first served. OAT holders will be eligible for potential benefits (such as airdrops or whitelists) after completing all tasks. In addition, among the 3,000 OAT holders, the top 20 testers who provide the most valuable feedback will be rewarded with exclusive OG roles and a bonus of 20 USDC each. The selection criteria will be based on the quality and impact of the feedbacker's insights.
The tasks are also very simple. You only need to follow, like, and retweet, join Discord, participate in the test, and send messages in the designated channel to get it. The minting fee of OAT is all paid by the project party, and participating users do not need to pay gas fees. OAT has an upper limit and the project product has been launched. In addition, the project is built on the popular L2 public chain Optimism, so the gold content is still very high. It is recommended to participate.
Event Link:
https://galxe.com/ExtraFi/campaign/GC3FKUxN85
Final Thoughts
Extra has its own lending pool, and users can also obtain stable returns by lending a single asset, while borrowers can use leverage to increase returns. Borrowed funds are used in a targeted manner and can only be used in the leverage pool. Funds do not leave the protocol, which minimizes the risks of lending and the protocol.
There are also risks associated with the use of leverage. Liquidation risk is a unique risk brought by the use of leverage. In Extra Finance, this risk is controllable. In Extra Finance, when the LTV ratio reaches 83.33%, liquidation will be triggered, leaving a buffer of 16.67. In the Extra page UI, the liquidation price is clearly displayed to users, allowing users to rebalance in advance according to the market. Flexible position settings support users to open long/short and neutral strategy positions, which can obtain excess profits in specific market conditions and avoid liquidation risks.
Users do not need to add liquidity in the integrated Dex and jump to the operation. In Extra, they can add a single asset or two assets of any value, customize the leverage multiple, and add liquidity with one click. The simple and convenient process, Extra Finance's user-friendly functional design and UI display make it easy for DeFi novices to operate, allowing more people to enter DeFi and enjoy the convenience and benefits brought by DeFi.
