Adding DEFLY to the lending market

It is the premier ASA in algorand and is also the ASA with the highest TVL across all pools, what would be any pros/cons of being able to deposit on Algofi?


because of its low liquidity it could only have a collateral factor of 0 otherwise it would be easy to force liquidations and bring the price so much down that the protocol is left with bad debt


You know it has three times as much liquidity as goBtc, right?

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I’d say if there ever was going to be a non-wrapped/stable ASA that you could supply, Defly is the one.

If goBTC and goEth, their combined liquidity about the same as Defly, can have a collateral factor of 0.7, I don’t see why Defly can’t.

are you aware of how the oracle doesnt use the price of goBTC on DEXs? it uses the price of BTC on CEXs. that is a comparison that doesnt work


Fair enough, but then you’re essentially saying that we can’t add any ASAs to the lending protocol?

unfortunately Algorand has a liquidity problem… it will probably be hard to launch an ASA with a collateral factor greater than 0 for some time. but with collateral factor 0 it still could be lended and borrowed, so people could start going Long or Short via this for example


I might be having a silly moment, but how would you go Long with a factor of 0?

i am the silly one, sorry. hmm with collateral factor you cant really open a Long position in the way:

supply Defly → borrow ALGO → buy Defly → supply Defly

you could just borrow ALGO or USDC exchange to Defly so you are Long in some way

Fair enough points, I guess would a better argument be that we lock defly LP tokens instead, that way liquidity is retained? I.e. DEFLY/ALGO or DEFLY/STBL LP tokens?

hmm, not sure I follow. But why would we set Defly collateral factor at 0, instead of like .25 or .5? Especially since their is so much liquidity available across various AMM’s? Doesnt this make it the most liquid ASA?

Some color to add here,

The v2 algofi protocol has BOTH a collateral factor and a borrow factor. The borrow factor has not been used yet but basically it makes borrowing of volatile assets feasible by requiring multiples of the normal amount of collateral. So a market with a borrow factor of 2x will require twice the collateral to back a borrow position. This lever makes non blue-chip ASAs more practical without exposing the protocol to outsized risk.

All that said IMO the following 3 things need to be satisfied for a token to be even considered for inclusion (even at 0 collateral factor)

  1. There needs to be a fairly large amount of AMM liquidity to support potential liquidations, this means likely at least $1M of depth and >= 25% of the predicted market size
  2. There needs to be a reliable offchain data source for pricing (CEX). As many have mentioned fully onchain pricing is easy to manipulate, using TWAP you could get away with it for a big asset like ALGO/USDC, but for these smaller cap assets manipulation is far to easy.
  3. The team/product/code behind the token need to be thoroughly vetted and doxed. This is much less important if the collateral factor is 0 but still, bad tokens on the protocol are a bad look

This is not to make any claims about any specific tokens or teams, just to offer a way to evaluate questions like these.


I agree with all points but I would raise the liquidity requirement to at least $250M. I know that means no ASAs qualify at the moment, but we must always protect the base above all.


At least $250M is extreme…

I say we focus on building liquidity for BANK so that it can be the first ASA fully integrated with the lending market.

I understand it’s an AlgoFam favorite but the truth about Defly is that the value of the token is just a small amount of combo gains on swaps. There are other dex aggregators that offer the same swaps without needing to own as much of a token.

The value of BANK is an increase in apr on staked assets, the ability to direct future BANK emissions, and the opportunity to govern a DeFi lending market, dex, and stablecoin.

It will take some time but in my opinion it’s clear that BANK will be in a league of its own on Algorand.

I love the Defly wallet too. But as a token, I just don’t see any comparison to BANK. So why focus on Defly? What will you gain by having a zero collateral factor ASA to the lending market? Don’t hate me.



Another potential issue here is correlation and its influence on systematic risk. In the case that Defly could be collateral, it is likely highly correlated to Algo. If something happened to crash the price of Algorand, it would then take Defly down with it which would nullify any diversification benefit to differentiated collateral backing STBL. goETH, goBTC, and Algo are already fairly correlated.

Even if Defly isn’t enabled for collateral, you still get the risk on the other side with liabilities. If Algofi is heading in a similar direction as Maker, there is a world where protocol profits are redistributed to holders of BANK but so are losses. So its prudent to manage risk as well.

Not against listing ASAs though. Would be open to anything that would pass the checklist @pcolella gave and also isn’t very correlelated to Algo, goETH, or goBTC.

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Have to disagree here. The team has PHD and accomplished founders, they are the only real ASA that has value and their roadmap and execution has been flawless. They will be a premier wallet cross chain going forward. Its mobile first and in the next few quarters, you wont have to go to 4 different AMM’s to swap, or LP - it will also have L1 bridges

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Owning Defly gives you no other benefits other than swaps. It’s not tied to the wallet or any of the other awesome features. Alammex offers better swaps than defly for free. Defly is great but don’t confuse value of the wallet with value of the token. You don’t need much of the token to use Defly. That’s all I’ll say

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in case you missed it this is developed by Alammex and Defly

Defly is native on mobile has great portfolio stats, alerts, supports Governance / NFT, with limited orders, hardware support, desktop version, staking, governance coming up can hardly call it just a wallet. many people will disagree with your statement.

if we are discussing tokens the FDMC of Defly is only at $6.8M vs. $BANK which is at a whopping $70M with only 5% in circulation and less than 3 weeks old.

i use both platforms daily so i don’t want to be bias just just because i m on the AlgoFi Forum.

what dragonfi asked is where comes the value of the token DEFLY from? you only need that for now for higher combo gains and as you’ve already said Alammex offers the same, Vestige too (1 VEST = 25K Defly = 80% combo gain). and Alammex will offer limit orders too

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combo gains with a swipe on a secure mobile trading Dapp with live charts / alerts etc. DEFLY is on cost saving whereas $BANK is on increasing return via Boost. so where comes the value of BANK especially with the current emission schedule?