The GARD team suggests that $GARD should be added to AlgoFi’s lending market. This collaboration would add tremendous value to the Algorand’s DeFi ecosystem via boosted composability between two prominent protocols. We suggest integrating $GARD in phases to ensure that the AlgoFi lending market remains healthy and that $GARD in circulation can increase organically thanks to increased ecosystem partnerships.
What is $GARD?
$GARD is an overcollateralized stablecoin, similar to DAI, that can be minted and borrowed against intrinsically valuable and decentralized collateral.
To mint $GARD, users can use $ALGOs, $ALGO derivatives (e.g. $GALGO), or $ALGOs committed to governance via the GARD Protocol that would otherwise be locked in a user’s Algorand governance position.
As opposed to other competing stablecoins, $GARD is hard money and can now be staked natively on the GARD dApp to earn a share of the protocol’s revenue from borrow positions.
GARD Protocol’s Website: https://www.algogard.com
GARD Protocol’s dApp: https://www.gard.money
Since the launch of GARD’s v2, there has been a significant increase in the overall support for GARD from the Algorand DeFi community. The protocol has $7M+ TVL , over 1.3k+ users, and $GARD has maintained its $1 peg almost perfectly. Many AlgoFi users already hold $GARD.As adoption increases, there will be more value to AlgoFi’s lending market as well as to GARD’s platform which may cultivate opportunities for new Algorand DeFi participants.
As stated, $GARD needs the help of partnerships to increase its adoption. These partnerships will both bring in new users and help deepen liquidity. Liquidity is the lifeblood of DeFi; a lack of liquidity prevents markets from running at peak performance. The gradual integration of $GARD as an asset to be borrowed and to be used as collateral would bring more liquidity.
In order to help kickstart adoption, the GARD Protocol is happy to deposit $GARD onto the AlgoFi lending platform so that it may be borrowed via new forms of collateral and then deployed on GARD’s platform for staking/liquidating or on the broader DeFi ecosystem. This ability to deposit/borrow will create new opportunities for $GARD holders.
Another important consideration is whether to allow $GARD to be used as collateral on AlgoFi. Given the current obstacles in “good” oracle data as well as shallow liquidity, we suggest that $GARD always be treated as $1 by the protocol. The corresponding collateral factor could be fixed, or be a ratio of the $GARD deposited on AlgoFi compared to the liquidity available for $GARD on DEXs.
Potential benefits to partnering for AlgoFi?
$GARD can be a catalyst for the continued growth of AlgoFi. It has a vibrant and growing community with significant liquidity. In fact, a fair number of our users also use AlgoFi and would immediately benefit from this collaboration. As GARD expands its user base and targets first-time DeFi users, AlgoFi would be prepared to work with the new users.
$GARD can also help deepen liquidity on AlgoFi’s AMM. Currently, $GARD has liquidity dispersed between multiple DEXs which is valuable to get exposure to different audiences. However, in order to make liquidations easier we could consider moving our protocol owned liquidity to AlgoFi and encouraging our liquidity providers to do so as well. In the event of liquidations, this would further lessen the burden placed upon liquidators should they want to swap out of $GARD.
AlgoFi can profit from GARD swapping, borrowing, and lending by integrating GARD to its lending markets. As GARD’s footprint grows, so too will the potential revenues from this partnership.
As per the current suggested precursors to listing new ASAs in AlgoFi’s lending markets stipulated here (Types of Proposals - Algofi) the protocol does not fit perfectly quite yet.
The protocol is shy of the $1M USD in liquidity that’s suggested, however, the price volatility of GARD is low. Given that the liquidity in DEXs accounts for more than 25% of all minted GARD, we believe that our liquidity is deep enough for now assuming that a low collateral factor (for borrowing) is used.
Reliable off-chain data for GARD is not yet available, however, it would make sense to price GARD without an oracle for now. Given how significantly overcollateralized GARD (378% at time of writing) is by valuable (non-GARD) assets, GARD will likely maintain its peg over time and remain valuable. As we wait for an oracle solution to launch (e.g. Goracle), combining a fixed price for GARD and a low collateral factor will protect AlgoFi’s lending markets appropriately.
The GARD team is well known and has been building on Algorand for 18+ months. We are active participants in the Algorand community (DeFi and beyond) and we are committed to building. We’ve also taken extensive steps to protect the integrity of our smart contracts and secure our users’ assets.