Get ready for the bull market now to grab those massive Xs.
To capture those sweet Xs, get your hands dirty and scratch the surface.
I did the work so you don't have to.
Let's dive into @SenecaUSD - $SEN and see how they're set to dominate the LSDfi market.
A🧵
In this thread I will cover;
1️⃣ Latest developments on LSDfi
2️⃣ CDP mechanism
3️⃣ Seneca Protocol
4️⃣ Apricus Chambers
5️⃣ Tokenomics
6️⃣ Conclusion
1️⃣ Latest developments on LSDfi:
The LSDfi market is currently experiencing rapid acceleration.
$LYBRA v2 is in the works, bringing numerous new features.
$R has introduced 1-step leverage up to 6x, allowing you to earn a 25% APR on your LST.
In the meantime, new primitives like Eingenlayer are shaping the space by creating new utilities for LSTs.
You can restake your LST to earn incentives from protocols that need to secure their state with Ethereum's security layer.
Lybra is at the forefront of capturing LSTs in their protocol, followed by $crvUSD and Raft fi.
In my opinion, we are still far from market saturation. I believe we will soon enter a shake-out phase to eliminate forks and non-value added protocols.
In the meantime, some protocols will gradually expand their features and carve out small niches within the space. A few of them may even surpass the $LBR TVL.
I believe Seneca has the potential to capture a significant market share with its isolated-debt function and LPTs.
2️⃣ CDP Mechanism
Without delving into Seneca, it's important to highlight how CDP protocols work and their essence.
CDP protocols involve projects that create their own stablecoin through collateralized lending.
Maker DAO, with its $DAI, is the pioneer and creator of this framework. The general CDP category currently holds over 9 billion dollars.
Users can simply lock a specific amount of collateral in a smart contract and borrow assets based on the CR determined by the risk parameters.
CDP protocols offer convenient ways to leverage additional rewards on borrowed assets and enable to create Delta Neutral strategies.
It's important to note that there are also disadvantages and risks associated with their use, such as the risk of bad debt.
Bad debt arises from a massive liquidation cascade effect when the value of collateral plummets during market turmoil.
As a result, the collateral cannot be sold at a fair price, leading to a shortfall.
3️⃣ Seneca Protocol
Seneca is a CDP protocol designed for LSTs. Users will have the ability to mint $senUSD using their LSTs, such as weETH, cbETH, LP tokens 👀
This means Seneca is taking the LSDfi game one step further by enabling yield-bearing assets to be used as collateral.
Seneca is set to accept LP tokens from Curve, Balancer, and Uniswap v3, allowing users to maximize their capital efficiency.
Compared to its rivals, Seneca's target audience is broader.
I believe this will give them a competitive edge in terms of earnings when they launch.
Let me tell you what you can do with Seneca.
Seneca utilizes Layerzero technology to offer omnichain capability, allowing users to seamlessly lend and borrow across different chains.
Here are some of the things you can do:
• Borrow $senUSD against your yield-bearing assets.
• Leverage your borrowed assets through looping.
• Earn platform revenues.
• Experience the ease of omnichain functionality.
4️⃣ Apricus Chambers
But how will Seneca manage its risk with numerous collaterals and yield-bearing assets from various protocols?
Seneca has a solution: An isolated debt mechanism.
This means that each pool operates independently, allowing users to open multiple CDPs with different collateral and debt positions.
In other words, the debt within each CDP is isolated from the debt of other pools.
By doing this, you won't be taking the risk of other pools, only your own pool that you have borrowed or lent from.
Seneca will still carefully select protocols with high reliability and sufficient liquidity to further mitigate risks within isolated pools.
💰Stablecoin
$senUSD, similar to other CDP stablecoins, is minted by locking collaterals and following a specific collateral ratio (CR). But how does it maintain its peg?
If the value of senUSD is greater than $1, users can mint senUSD with collateral worth more than $1 and sell it for a profit.
If the value of senUSD is less than $1, users can buy senUSD from the open market and redeem it for $1, which helps drive the price back to $1.
5️⃣ Tokenomics
I've noticed that Seneca took note of the LSDfi tokens in the market when creating their $SEN.
While $LBR achieved considerable success with its project, their tokenomics faced criticism due to their emission model and the percentage allocated for incentives.
The amount of $SEN shared for bootstrapping the protocol seems more reasonable at 35%.
It's important to consider that around 30% of the supply will be on the market during the first 3 months.
Users have the option to lock 80sen-20weth for 16 weeks in order to receive $veSEN and earn several benefits:
• Real yield from protocols' revenue
• Participation in the decision-making process
• Receiving bribes from protocols for directing $SEN emissions to specific pools
Seneca has various efficient revenue generation resources, including:
1) Borrow fees
2) Interest accrued by open positions
3) Protocol share of liquidation fees
In the meantime, the protocol will buy back $SEN from the market and burn it using 50% of the lending revenue.
This makes $SEN a potentially deflationary token in the future.
Security is a top priority for Seneca. Prior to their launch, they will undergo an audit.
Additionally, the team will implement borrowing restrictions at launch to ensure a gradual growth of the user base and mitigate potential risks.
6️⃣ Conclusion
When you realize that a project has the potential to capture a significant market share and fill a niche within its sector, there are luxury rewards awaiting.
I believe $SEN might be a strong candidate for this, given its isolated debt mechanism, CHAD team, organic growth of their community, acceptance of various LPTs and LSTs to drive more revenue, and utmost importance placed on security.
I will be closely monitoring their progress.
Seneca Protocol ---> LSDfi borrowing, $SEN - follow them
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