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Alfprotocol Uses Both Leveraged and Unleveraged Solutions for Liquidity Providers

Companies
Thu, 11/25/2021 - 06:50
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Arman Shirinyan
Alfprotocol utilizes Solana blockchain for providing the best possible leveraged and unleveraged liquidity provision solutions
Alfprotocol Uses Both Leveraged and Unleveraged Solutions for Liquidity Providers
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The Alfprotocol group of protocols create efficient decentralized liquidity provision with the use of sophisticated market maker technologies that create solutions for both risk-on and risk-off investors.

To provide unleveraged products for its users, the protocol utilizes AlfMM technology, which is essentially a decentralized exchange service, and AAlf, which is an overcollateralized borrowing service. For clients who are willing to expose themselves to leveraged solutions, Alfprotocol uses modules that communicate with various external protocols like Solaris and Jet Protocol. With the use of external technologies, the protocol provides more high-tier leverage.

Solana high capacity blockchain

Solana blockchain allows products like Alfprotocol to develop a more efficient solution for its users. In comparison with traditional blockchains like Ethereum, Solana allows significantly more transactions per second and handles a large number of transactions at a higher speed.

With the use of the Solana blockchain, Alfprotocol's modules are able to handle positions in less time and cover the open liquidity provider's position. Solana's processing latency is 27.5 times faster than Ethereum's. The faster processing time also creates a safe environment for investors. Whenever liquidation happens, thanks to the Solana blockchain, the position will be covered immediately without creating additional losses for both parties.

For example, the Ethereum network during congestion periods could create significant risks for investors that now have to pay up to $400 per transaction. Such conditions create more risks for investors since they are not being able to close their positions at the right moment.

Here's why Solana is perfect for leveraged liquidity

High leverage liquidity mostly relies on two factors: the volatility of the assets and the reaction time of the protocol that is responsible for liquidating "unhealthy" positions. The chosen blockchain must have essential characteristics like rapid processing and low congestion to make the protocol work effectively.

Solana blockchain handles 59,000 transactions per second compared to Ethereum's 17,000 and Cardano's 250,000. That is why building a decentralized finance protocol on top of the Solana blockchain is the most optimal decision for a product like Alfprotocol.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.