Sturdy Finance - Efficient DeFi Lending Protocol
November 30th, 2022

Key Points:

  • What is Sturdy Finance?

  • Sturdy Finance Mechanics

  • Sturdy 1.0 and Features

What is Sturdy Finance?

Sturdy is a new kind of DeFi lending protocol for interest-free borrowing and high-yield lending. But before discussing how Sturdy Finance makes this possible and why it is unique, let's first take a look at how conventional lending platforms work.

As demonstrated in the image below, lenders deposit assets on which they want to earn interest, while borrowers supply collateral and get the assets deposited by lenders as a loan. Later, the borrower pays back the loan along with the interest to the protocol and gets his collateral back.

A DeFi Lending Protocol
A DeFi Lending Protocol

On existing lending protocols, the interest earned by lenders comes from borrowers, whereas yields in Sturdy come from the borrowers' collateral! but how?

Sturdy Finance Mechanics

As shown in the illustration below, when a borrower deposits collateral in order to take a loan, Sturdy takes the collateral and converts it to interest-bearing tokens(ibTokens) on Lido or Yearn. These ibTokens accumulate yield over time, and the yield from these tokens is then distributed to lenders in the same token they deposited.

As a result, lenders can earn high stablecoin returns while borrowers receive interest-free or close to 0% loans, creating a win-win situation.

Sturdy Finance Mechanics
Sturdy Finance Mechanics

Sturdy Finance Features

Let's look at some of the important aspects that make Sturdy Finance appealing to both lenders and borrowers.

  • No extra fees - only gas fees

  • Close to 0% interest rates

  • High, stable yields in comparison to market-determined interest rates

  • Daily harvested collateral yields

What’s next?

In addition to the features listed above, the Sturdy Finance team plans to release Sturdy 1.0, which will include a complete redesign of the User Interface (UI) to enhance user experience, support new assets, and enhance security with third-party auditing (from Quantstamp).


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