Universe Finance, the first DeFi project to offer this option on Polygon, has officially released its ‘Leveraged Vault’ and ‘Lending Vault’ products. The team is steadily making progress toward the targets set in the roadmap and they are constantly improving the products offered to fulfill the various demands of Universe Finance’s growing consumer-base.
What is this new feature exactly?
Of course, it is important to understand what is being offered by Universe Finance in order to make the most out of it. Lending vault is essentially a product that generates reasonably consistent income. It is intended for investors with a low risk tolerance and can be used to successfully store any asset that users wish to lend. After the users pick the number of tokens and complete the transaction, their tokens will begin to work for them. The leverage vault will thus ‘lend’ deposited tokens to borrowers, and the depositors will in turn benefit based on the respective APY of each lending vault.
The leveraged vault is built on top of the lending vault and is mainly intended for risk-taking users and investors that can bear temporary losses and are looking for greater yields. These users can increase their returns by using the leveraged vault as Universe Finance will merge borrowed tokens and their own money to offer liquidity in the Uni-V3 smart vaults after investors use leveraged vaults to borrow assets from lending vaults. U-Tokens (the certificate that proves how much money is placed in a smart vault) will also be utilized as collateral.
Why are the new vaults important?
There are a few reasons as to why the new vaults have been launched. Firstly, users are provided with multiple choices as Universe Finance is ultimately a risk-grading platform. Through a variety of products, the team addresses the demands of LPs with varying risk appetites. The lending vault was created for those that are risk reversal, while the leveraged vault contains relatively high risks and is intended for risk-seeking individuals as aforementioned.
Moreover, the overall amount of risk is lowered thanks to the vaults as Universe Finance provides 2 to 8 times leverages that are in fixed proportions, with the leverages varying as per the corresponding vault. Universe Finance also offers bigger leverages to popular cryptocurrencies, altcoins and stablecoins in addition to providing exotic pairs with smaller leverages such as WETH-LOOKS. The leverage strategy is also neutral, which means that investors need not short or long the tokens to leverage their respective assets. As the leveraged vault users are being given lower risks and higher harvesting yields, this approach may also assist users to avoid liquidation which in turn can protect their funds.
Finally, by using leveraged vaults, investors may rely on borrowed funds to boost their profits on their investments. Combined with the already increased capital efficiency of Uniswap V3, the leveraged vault therefore provides a seemingly excellent opportunity to increase returns.
What to know beforehand
The lending and leverage vaults are implemented on top of the Polygon section’s existing smart vaults. Leverage vault deposits will be dual-sided, in sync with the associated smart vault. The more the capital, the greater the temporary loss, so before making a deposit, investors should be informed of the risks. To protect lenders’ funds, forced liquidation will also be triggered when borrowers’ debt ratio hits a particular threshold. Users can add positions ahead of time to minimize their debt ratio and prevent liquidation.
Lastly, profits are usually accompanied with risks, so if an investor’s earnings rise at a 10% annual rate and they use a 2 times leverage, they can make up to 20%. However, if the user employs the 2 times leverage, the loss can also be doubled.
Partnerships and future goals
Universe Finance has managed to establish key strategic partnerships in order to help ensure its longevity and continued success. Some of the main collaborations include but are not limited to Polygon, Olympus, Instadapp, DODO, DefiLlama, Biconomy, Tetu and Stakewithus. Universe Finance has even become a part of the Polygon Alliance as per the latest developments.
In terms of future goals, the team will focus on supporting more chains, releasing leverage farming on Polygon, Ethereum and other chains, trying to manage $1 billion Uniswap V3 liquidity and providing a private vault for DAO treasury management.
About Universe Finance
Universe Finance is Uniswap V3’s active liquidity management platform based on risk ranking and quantitative techniques. The goal is to maximize users’ Uniswap V3 returns. To that purpose, Universe Finance has developed a suite of innovative products as well as some proactive liquidity management solutions to address commonly faced issues such as increased risk, high gas prices, and the timing as well as frequency of rebalancing and reinvestment.
For more information, visit the official website and the Discord, Reddit, Medium, Github and Twitter channels.
