Beta Finance
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Beta Finance is the permissionless money market for borrowing, lending, and shorting crypto assets in the Ethereum and Avalanche. This means that anyone at anytime is able to create a money market for any crypto asset.
How it works
- Beta Finance is a protocol that enables DeFi users to have access to a scalable and accessible money market where tokens can be listed permissionlessly and automatically, as well as to an effective, easy-to-use short selling tool. We encourage users to interact with our protocol and leverage new DeFi strategies that are now possible with an accessible on-chain short selling solution and permissionless listing. Beta Finance is live on Ethereum Mainnet and Avalanche C-Chain networks.
- To enable the support of more volatile assets, Beta Finance has an isolated collateral model, meaning there is no cross-collateralization. For example, given 10 ETH used as collateral, with 5 ETH allocated to borrowing $ALPHA, and 5 ETH allocated to short selling $MATIC. If $MATIC spikes in price, and you're at risk of liquidation, only the 5 ETH allocated to your $MATIC position is at risk of liquidation. The other 5 ETH associated with your ALPHA position is safe and will not be liquidated. You can reference our Risk Framework section for more information.
Short Selling
- Short sellers are able to use supported collateral to initiate short positions on Beta Finance. Short selling on Beta Finance is in principal leveraging a Borrow on Beta and immediately selling the borrowed token, and thus follows the same collateral and LTV requirements as a borrow.
- On the surface, short sellers interacting with Beta Finance's "1-Click Short" tool only need to enter the amounts of the underlying token to be shorted and collateral, select the DEX to swap through, and click a button to initiate the position.
- Behind the scenes, the process begins where Beta Finance will borrow the underlying token from its respective money market for you, checking sufficient collateralization. The borrowed token is then swapped through the specified DEX (currently supporting Sushiswap, Uniswap V2, and Uniswap V3) to the collateral token used. The newly swapped collateral token is then staked with the principal collateral used in the short position.
Lending
- Lenders will be able to lend assets for any money market that exists on Beta Finance to earn additional yield from the lending interest rate. Interest is paid to lenders from the borrowers and short sellers who pay the borrow interest rate, for borrowing assets for leverage or short selling assets for trading and DeFi strategies. There is a single lending pool for each token, so lenders are guaranteed to be earning the maximum possible yield on Beta Finance for their deposited token at all times.
- Assets deposited on Beta Finance's money markets are managed as an ERC-20 token balance. Upon deposit, a lender will receive bTokens, representing the lender's stake to the interest accruing share of the underlying token. For example, depositing ETH will cause the user to receive bETH in return.
BETA Token Functions
- Staking incentives: BETA token holders will be able to stake their tokens on the protocol and act as a backstop for covering shortfall events. BETA holders who stake their tokens will receive a portion of the revenue generated by the protocol.
- Liquidity mining: Liquidity providers can stake their assets into the lending pools to enable borrowing and short selling. To incentivize these providers given opportunity costs, liquidity providers will be eligible to receive BETA tokens through a liquidity mining program, adjusted based on a user’s relative contribution and additional parameters.
- Governance: BETA token holders will be able to participate and vote in the governance process of the platform. Through governance, users can influence and modify product features and key parameters of Beta Finance. This will enable BETA token holders to influence the direction of the protocol's development.