The highest yielding decentralized stablecoin

What is Ebisu?

Ebisu Finance allows users to borrow dollar-denominated credit against liquid restaking tokens (LRTs) via a decentralized stablecoin.

ebUSD is Ebisu’s overcollateralized stablecoin that gives users access to a stable store of value while generating yield through EigenLayer AVS rewards and Ethereum staking rewards.

Key Benefits

• Borrow dollar-denominated credit against LRTs while maintaining exposure to EigenLayer and Ethereum staking rewards (self-repaying loan).

• ebUSD is directly redeemable at face value for $1 of LRT collateral.

• Take leverage against LRT unconstrained by lenders.

• Hedge risks associated with individual LRTs.

Why Ebisu?

Stablecoins have the highest degree of real-world product market fit of any blockchain use case. They offer an alternative to fiat currencies by enabling the permissionless storage, and 24/7 transferability, of dollar denominated value. Stablecoins are used for cross-border payments, to reduce transaction fees incurred by centralized intermediaries, as a censorship and inflation-resistant store of value, and more!

However, the vast majority of issued stablecoins can be censored by centralized entities because they are collateralized by or exposed to fiat, and/or issued by entities susceptible to regulatory control. Centralized stablecoins do not fully realize the promise of permissionless, self-custodial money.

Ebisu’s goal is to scale decentralized stablecoins to the masses.

State of the Market

• $160B worth of stablecoins issued to date.

• $18T in deposits held in US banks; global banks hold $183T in deposits.

• ~7M people have transacted with stablecoins to date, while more than half a billion live in countries with 30%+ inflation.

Enter EigenLayer & LRTs

EigenLayer is a marketplace for Ethereum's decentralized cryptoeconomic security. It enables the creation of decentralized protocols, called actively validated services (AVSs). AVSs use EigenLayer to rent Ethereum’s shared security to bootstrap the decentralization and integrity of their protocol. ETH deposited into EigenLayer is used to secure the Ethereum blockchain and AVSs, and ETH staking rewards plus AVS rewards are paid to depositors.

We believe EigenLayer is becoming the de facto risk-adjusted yield source for ETH staking. As permissionless innovation on EigenLayer scales, so does the real-yield paid to EigenLayer depositors by AVSs.

Liquid restaking tokens (LRTs) are tokenized assets representing EigenLayer deposits, similar to how liquid staking tokens represent Ethereum staking positions. LRTs are being adopted in DeFi as novel yield-bearing collateral. As ETH beacon chain staking rate continues to increase, the opportunity cost of not restaking rises, acting as a tailwind for LRT growth.

Stablecoins are a proven form of liquidity that enhance composability between collateral assets and DeFi. Ebisu enables composability between financial systems and EigenLayer, the greatest permissionless source of on-chain yield.

How does Ebisu Work?

Ebisu uses a collateralized debt position (CDP) system inspired by Liquity.

Overcollateralized Lending + User Set Interest Rates

Ebisu offers loans against LRT collateral to mint ebUSD. Users can adjust their interest rate any time throughout the lifecycle of the loan. Outstanding loans must be overcollateralized above a specified minimum collateral ratio (MCR).

User-set interest rates enables Ebisu’s rates on loans to be dynamic based on macro market conditions vs. being set algorithmically or by governance. This creates an efficient, market-driven equilibrium between borrowers and stablecoin holders strengthening ebUSDs peg.

Liquidations

If a loan falls below the MCR, liquidators will automatically liquidate the collateral to repay the debt, stabilizing ebUSDs value. Liquidators are rewarded with a portion of liquidation collateral plus a liquidation bonus. The liquidated borrower won’t have to repay the loan but won’t recover their collateral either. Their loss will equal the value of their over-collateralization.

Stability Pool

The Stability Pool facilitates efficient liquidations of bad debt ensuring overcollateralization of ebUSD. The Stability Pool holds deposited ebUSD that is burned to cover outstanding debt from liquidated loans. ebUSD holders are incentivised to deposit by Stability Pool yield composed of liquidated LRT collateral + protocol fees + interest rate payments + EBISU rewards.

Redemptions

ebUSD can always be redeemed at face value for $1 of LRT taken from the collateral of the debt position paying the lowest interest rate. Users who’s loans are redeemed against do not incur a net loss because their outstanding debt is reduced according to the USD value of the redeemed LRT collateral.

Redemptions play a crucial role in maintaining the ebUSD peg, because if the value of ebUSD falls below that of USD, arbitrageurs will buy ebUSD on the open market and redeem it for LRTs at a profit. In Liquity v1 and Prisma, collateral provided to the redeemer was taken from the loan(s) with the lowest collateral ratio. In Ebisu, the decoupling of redemptions from collateralization ratio (LTV) of loans enables long term capital efficiency for the protocol.

Assets

Ebisu will tentatively support the following assets on launch:

• weETH (Etherfi)

• ezETH (Renzo)

• rswETH (Swell)

• rsETH (KelpDAO)

• pufETH (Puffer Finance)

• ynETH (YieldNest)

• uniETH (Bedrock)

• Mellow

Ebisu’s Values

In Japanese mythology, Ebisu is the deity of fishing, wealth, and fortune. Fishermen tell stories of how Ebisu keeps the ocean safe and pristine, becoming enraged whenever people pollute the ocean. Amidst the turbulent sea of DeFi, Ebisu Finance strives to be a safe harbor.

Ebisu Labs is committed to building a fully decentralized, censorship-resistant protocol.

To execute this vision, it is paramount to properly underwrite the risks associated with restaking, LRTs, and AVS slashing and rewards, as well as educate users about these risks.

Wen

In the coming weeks, we will reveal more about Ebisu and its launch, tokenomics, LRT and AVS research, and novel mechanisms while the protocol undergoes multiple audits from top security firms.

We currently have pre-deposit vaults live! Deposit LRTs to earn Koi at ebisufinance.com/points. Learn more by reading “Ebisu Koi Campaign: Epoch 1”.

Links

X: @Ebisu_Finance

Community: https://discord.com/invite/yM4YcDSRRn

Updates:  https://t.me/Ebisu_Finance_Updates

Website: https://ebisu.finance/