Unstable

Unstable Protocol is a decentralized finance (DeFi) protocol operating in the emergent Liquid Restaking Token Finance (LRTfi) market. The company provides a high-leverage layer designed for users to execute advanced yield strategies. Its core service enables users to borrow against their yield-bearing crypto assets, such as staked Ethereum (ETH) and various liquid staking derivatives (LSDs), without forfeiting the underlying staking rewards. This mechanism is designed to enhance capital efficiency, as the deposited collateral continues to generate yield while simultaneously securing a loan.

The business model centers on the issuance of its native stablecoin, nUSD. Users mint nUSD by locking their approved high-yield assets in the protocol's vaults as over-collateralized positions. Revenue is generated through one-time origination fees charged when users mint nUSD. This fee structure is dynamic, influenced by factors like vault utilization and the type of collateral, offering predictable borrowing costs compared to traditional variable interest rate models. The protocol serves DeFi users who want to unlock liquidity from their staked positions for other investment opportunities or to leverage their holdings for potentially higher gains.

Unstable Protocol’s infrastructure leverages zkOracles and zkSNARK-based validator proofs to verify collateral and its underlying value. A key partnership with Succinct Labs provides this zero-knowledge proof technology. The protocol also collaborates with Axelar for cross-chain interoperability, allowing the utility of staked ETH to extend to Layer-2 blockchains. To ensure solvency, the system employs an automated liquidation process. If a position's collateralization ratio falls below the required minimum (e.g., 125%), the collateral is sold to cover the debt, protecting the protocol from market volatility. The company announced a $2.5 million seed funding round on March 27, 2024, with investment from firms including Lattice, Laser Digital (Nomura Group), Blockchain Founders Fund, and others. The testnet was launched on the same day.

Keywords: Unstable Protocol, DeFi, LRTfi, Liquid Restaking Token, decentralized finance, crypto lending, nUSD, yield-bearing assets, liquid staking derivatives, ETH staking, overcollateralization, zkOracles, zkSNARK, EigenLayer, blockchain finance, crypto leverage, stablecoin protocol, asset-backed tokens, capital efficiency, DeFi borrowing