KeeperDAO – an automated keeper pool – launched v1 of its protocol for pooled liquidations, rebalances, and arbitrage in DeFi.
KeeperDAO v1 is live! https://t.co/WKBpR8rKPr
— KeeperDAO (@Keeper_DAO) July 18, 2020
KeeperDAO cited the March 12th cryptocurrency market crash as a prime example of when it would have been beneficial for the ecosystem to have liquidity on-hand to assist with liquidations and general market efficiency.
Aside from helping to absorb issues caused by volatility, KeeperDAO also acts similarly to flash loan providers, offering access to a large pool of funds for regular on-chain arbitrage opportunities across exchanges and lending platforms.
Unlike other DeFi platforms which are built around over-collateralized borrowing and lending, KeeperDAO is focused entirely on providing a liquidity pool for flash loan-like transactions.
KeeperDAO liquidity providers receive a portion of profits from successful transactions made within the pool, allowing non-technical users to benefit from the expertise of arbitrageurs who benefit from the extra capital at their disposal.
Users may also find that contributing liquidity to the pool is much more beneficial than setting idle funds aside in anticipation of an arbitrage opportunity.
KeeperDAO cited reduced competition for arbitrage opportunities as a core reason behind the pooled design. Multiple market participants attempting to take advantage of the same opportunity with their own funds are likely to end up in competition via gas fees, while attempting to secure their transaction’s priority. This can eat heavily into profit margins which are already limited by the individual’s own availability of capital.
In the case that these users have funds pooled together, competition for gas fees is eliminated while more total capital is deployed. All parties benefit from the transaction, rather than a single individual.
How’s it Work?
Liquidity providers may deposit and withdraw funds as they wish, while those who deploy the liquidity have the tougher job of programming their strategies via smart contracts.
Currently, only ETH and WETH are supported.
With all the buzz around DeFi tokens, the natural next question is “Will KeeperDAO have their own token”?
The answer is yes, there will be a KeeperDAO protocol token with two key functions: Governance and token burns.
The token’s governance power will primarily be designed to control the proportion of profit that goes to token buy-backs and burns, versus the proportion which goes to liquidity providers via the pool.
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