Introduction of Noncustodial Liquidity Markets on Base with Aave v3 Fork

Developers Collaborate to Introduce Non-Custodial Liquidity Markets on Base Layer-2 Network

A collaboration between decentralized finance (DeFi) developers has resulted in the creation of non-custodial liquidity markets on the layer-2 network Base. The collaboration includes developers from Seashell, RNG Labs, and Loreum Labs, as well as advisors and collaborators from projects like Ampleforth and Uniswap. The team has developed the Seamless Protocol, a fork of Aave v3, which allows smart contracts with predetermined borrowing strategies to conduct undercollateralized borrowing on-chain.

Undercollateralized Borrowing Made Easier

Undercollateralized borrowing is not new in the crypto space, but it usually involves a combination of off-chain and on-chain steps. The Seamless Protocol simplifies this process by connecting the steps together in a trustless and transparent manner. Borrowers can specify the purpose of the additional liquidity they seek, and liquidity suppliers have full visibility into how the funds are used. While general purpose loans are also supported, they still require overcollateralization. The Seamless Protocol aims to provide a better solution for undercollateralized borrowing by relying on smart contracts and DeFi principles rather than on-chain reputation systems or identities.

Hot Take: Seamless Protocol Facilitates Trustless Undercollateralized Borrowing in DeFi

The collaboration between DeFi developers has resulted in the creation of the Seamless Protocol, which enables undercollateralized borrowing on the Base layer-2 network. This protocol allows smart contracts with predetermined borrowing strategies to connect liquidity pools with borrowing options in a trustless manner. Unlike traditional borrowing processes, which involve off-chain negotiations, the Seamless Protocol conducts all steps on-chain, providing transparency and visibility for both borrowers and liquidity suppliers. By focusing on trust code over humans, the protocol aligns with the core principles of DeFi. While general purpose loans are also supported, undercollateralized borrowing is the main value proposition of the Seamless Protocol. With this development, DeFi users have a new option for accessing liquidity without the need for excessive collateralization.