Existing lending protocols each have a single set of assets that users can lend, borrow, or use as collateral. This forces all users to take on the same risk and earn the same yield. But DeFi users have a wide array of risk tolerances: many prospective users would no doubt prefer to take on more risk for more reward or the reverse. Today, expressing multiple risk profiles in a single lending protocol is impossible.
Sturdy changes that. Users are able to select aggregators that fit their risk/reward profile, and can determine which silos they’re comfortable lending to. If an aggregator that fits their risk/reward profile doesn’t exist, they can create one!
Permissionless and adaptable
With other lending protocols, assets must go through DAO governance to be supported. This process can take months (or even years), and restricts users to only the largest and most well-known assets. Most assets don’t even meet the basic requirements to be considered (like a Chainlink oracle). With Sturdy, anyone can permissionlessly deploy a lending market for any pair of assets.
Isolated lending, without the liquidity fragmentation
A handful of projects have tried to circumvent the rigidity of permissioned pooled lending by isolating risk through separate pools. While this allows users to customize their risk profile, this approach comes with its own drawbacks. Lenders must actively manage their position to maximize yield as the pool rates fluctuate. Bootstrapping new pools becomes a chicken-and-egg problem, where borrowers are waiting for lenders, and lenders are waiting for borrowers. As a result, many pools tend to lie empty, with liquidity fragmented.
Sturdy V2's aggregators solve this. Bootstrapping liquidity for a new silo would be easily accomplished by whitelisting it in an existing aggregator, creating instant, deep liquidity from the moment a silo is deployed. Aggregators also vastly improve the lender experience, enabling them to deposit to an aggregator instead of having to manage many different positions.