Seal Finance aims to bring stability to markets of existing major DeFi tokens. This is done via a new approach to liquidity mining, one with a fixed APY and incentives to remain a provider. Additionally, stakers earn rewards in LP tokens to promote stability and avoid simply farming to dump.
What is Seal Finance?
Currently the DeFi sector is going through a period of exponential growth, which has attracted many new crypto investors into the space. This has led to various developers continuously cloning one protocol after another, meaning there is no longevity and farming operations are not sustainable. Seals Finance is taking a new approach, similar to Bancor, by using an elastic supply token to enable single-side deposits. Thus, the idea is to become an intermediary between major DeFi protocols and stabilize their markets through deeper liquidity.
The magic happens when new SEAL tokens are minted to distribute as rewards. Instead of letting users claim the tokens directly, these go into the Uniswap pools. As a result, rewards come in the form of LP tokens. Additionally, the designs stops farmers periodically selling their reward tokens which generally crashes markets. Currently, the whitepaper doesn’t go into details on how this works. Does the protocol market sell a portion of the newly minted SEAL tokens first? It would be great for the team to provide more technical details around this process.
Single-side deposits… Users just have to deposit a supported asset, as of time of writing: YFI, UNI, HAKKA, SNX, or PICKLE. The protocol will automatically do the rest, minting the corresponding amount of SEAL tokens to add liquidity to the Uniswap pools.
- Users then stake the LP tokens to breed additional SEAL tokens as rewards, with a fixed APY and compound interest. These parameters are governable by token holders.
Withdraw penalty… the protocol’s design is to promote being a long term liquidity provider. For example, withdrawing any liquidity from Seal pools, will incur a 5% net loss of the total value. Note this platform has not gone through any security audits as of yet, and is very experimental.