Ion Protocol

Ion Protocol allows their users to deposit yield-bearing ETH collaterals into their vaults to mint their ETH denominated stablecoin - $allETH.

Ion will accept the following collateral types:

By providing these yield-bearing collaterals, you can take a loan out on your positions and mint $allETH. This gives users access to liquidity while retaining complete access to their staking yield.

$allETH is pegged to $ETH and allows users access to liquidity by taking a loan out against their LST’s, while retaining access to staking yield. $allETH allows for liquidity against yield-bearing assets or ability to apply to different DeFi strategies. What is different in Ion Protocol than the other LSD/stablecoin protocols is the ability to borrow against LST LP positions and restaking positions.

One new DeFi project that comes to mind that will also allow users to borrow a stablecoin off of LP’s is Seneca. This is obviously huge as LPers can earn their trading fees from LP’s, yield from their LST, and have access to liquidity from $allETH.

Liquidations on Ion Protocol are caused by changes in the underlying balances of the validators backing a collateral vault rather than by volatile price action.

When a loan position is liquidated, a dutch auction is initiated that scales the liquidation bonus over time, enabling a more MEV-resistant liquidation market.

While reading their docs, I was a bit confused about their liquidation mechanism. Scrolling through their Twitter, I found a screenshot with a better explanation from inside of their Discord.

To be completely honest, I’ve tried rereading the docs and that screenshot over and over, and I’m still confused. The ‘liquidations’ page in their docs says coming soon so I’ll wait for a better explanation in there.

Restaking, in my opinion, is shaping up to be a new narrative to look out for. Ion Protocol will allow users to mint $allETH by collateralizing LRT’s (liquid restaking tokens), allowing restakers to retain their exposure to diverse sets of staking yields.

For example, you can take a loan on your $rstETH from Restake Finance, retain exposure to the yield from $rstETH, and access instant liquidity in $allETH.

Ion Protocol will also allow restakers to deposit their positions in return for aliquid representation of their re-staking position.

This service will be completely open-source, have zero fees, and will be open for any user or protocol to interact with, without needing to open an allETH position.

Ion Protocol is backed by a bunch of notable investors and VC firms.