Money and Finance on NEAR
OWS Education / NEAR Basics
Hello everyone! Welcome to the sixth chapter of ‘NEAR Basics’ issue which is a part of educational series created by the Open Web Sandbox team. In this piece we will talk about Money and Finance on NEAR and will mainly focus on several DeFi projects from the NEAR Ecosystem. If you would like to know more about Money and Finance on Blockchain in general, please check out our previous issue about ‘Blockchain Basics’. Let’s go!
DeFi Projects on NEAR
NEAR Ecosystem is growing every day: new projects keep popping up and DeFi projects are no exception. DeFi Stands for decentralized finance and represent blockchain-based financial instruments which are the crucial elements of building the Web3. Currently there are 120 DeFi projects building on top of the NEAR Protocol and they all can be found on the awesomenear.com repository.
Rainbow Bridge is undoubtedly one of the most important innovations on NEAR Protocol, facilitating the interoperability of NEAR. Launched in 2021, Rainbow Bridge allows to seamlessly migrate ERC-20 assets between three networks: NEAR, Etherium and Aurora. In total, 1,135,094,211$ worth of assets has been transferred between the networks through Rainbow Bridge ever since it’s launch. This makes all assets used on Etherium network fully usable on NEAR and all that with low gas fees and fast speed. If you would like to know more technical details about the way Rainbow Bridge works, please check out the article on the subject written by the NEAR team.
How to use Rainbow Bridge?
Users can easily connect to the Rainbow Bridge by connecting their MetaMask and NEAR wallets to the platform. Afterwards they will have to fill in the transfer details and confirm the transfer. It really is this easy! Sending assets from ETH to NEAR usually takes around 6 minutes and costs $10 USD per transaction. Once on NEAR, transfers are usually confirmed in under 5 seconds and cost less that one cent in gas fees. Do keep in mind that sending assets from NEAR back to Ethereum currently takes a maximum of sixteen hours (due to Ethereum finality times) and costs around $60 (due to ETH gas costs and at current ETH price).
Ref Finance is the first DeFi platform on NEAR and is entirely community-based. Ref combines several DeFi components on one platform: you can trade tokens on the automated market maker exchange, make use of liquidity pools (by the way, Ref allows the usage of multiple pools in a single contract) and farm or stake your tokens.
Ref Finance has it’s own token $REF and a treasury of 35 million $REF. As I mentioned previously, it’s a community-based platform which is managed through DAO, both community and council groups, making it truly decentralized.
Just like with other DApps, users will need to confirm the connection between the platform and their NEAR wallets. Once the confirmations is done, users can trade, farm, pool or stake tokens on Ref Finance.
Trisolaris is a decentralized exchange, or a DEX, running on the NEAR’s Aurora engine. Main benefit of Trisolaris is that it enables seamless trading experience with very low costs. It has simple and intuitive UI, high trading speed and can provide liquidity and swap any ERC-20 token, meaning that you can swap tokens from different protocols on Trisolaris.
In order to be able to use Trisolaris, you will have to connect both your MetaMask and NEAR wallet, just like with the Rainbow Bridge. Here please find more about practical guidelines on how to use Trisolaris.
Meta Pool is the first ever liquid staking on NEAR. What does liquid staking mean? With regular staking, users’ tokens are blocked and they cannot do anything with them before they unstake them. After users stake their $NEAR with Meta Pool, they receive stNEAR (short for staked $NEAR) which they can use to participate in other DeFi activities on NEAR.
On top of the regular staking rewards in $NEAR, users are also rewarded with $Meta tokens every epoch which is 12 hours. This tokes is a project governance token. Staking income is automatically staked again to maximise the compound income. There is also no need to wait the traditional 2–3 days to unstake your $NEAR in Meta Pool: users can do so instantly after paying a 0,3–3% fee. There is also an option to unstake your $NEAR for free but then users have to wait for 2–3 days. But hey, the option is there!
Not much is yet known about Decentral Bank, DAO developing and supporting NEAR-native stablecoins. The first stablecoin, $USN, was just launched on April 25 and is soft-pegged by the US Dollar and backed by the fund of $NEAR and $USDT. As of 25th of April minting $USN is possible on various third party NEAR wallets, like Sender Wallet. Minting on the website of Decentral Bank will become available soon.
How will USN remain stable?
First of all, there is an on-chain arbitrage: $USN maintains its peg through a smart contract which allows for the exchange between NEAR and $USN with 0 slippage and minimal commissions. At the point when $USN loses its peg, arbitrage members will regulate the price difference.
Secondly, $USN is backed by the reserve fund of $NEAR and $USDT, which is constantly filled with $NEAR swapped for $USN by the public.
And lastly, At launch, Decentral Bank will create a $USN & $USDT liquidity pool on Ref Finance’s StableSwap. This action provides for more stabilisation of the coin in the market.
After $USN will mature, it can be integrated on the NEAR Protocol as a native asset, which will be used to pay for gas and storage fees just like $NEAR is used now.
In this article we talked about DeFi on NEAR. In the next piece of this batch we will talk about Ownership and Provinence on NEAR and will look into several relevant projects building on NEAR. See you there!
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A human-centric digital hub for everyone wishing to engage with projects building on top of the NEAR Protocol.
Written by Vasilya.