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LP Finance is a new promising project. Its team created a synthetic asset issuance protocol that allows people to lock collateral as well as mint synthetic tokens. The company also developed zSOL. The latter is a Solana-pegged synthetic asset. Thanks to it, users will be able to leverage liquid staking yields and start short-selling.
LP Finance is a decentralized platform, and as such, it has its own native utility token. The team will launch it on October 24, 2022. The sale will end on October 28, 2022. LPFI is a SOLANA token, and it’s quite high-ranked on various ICO listing platforms. Its price will be 0.3 USD during the initial coin offering. The company aims to raise 500,000 with the sale. While the total supply of LPFI is 50,000,000, only 14,7% will be available for purchase at this stage.
The team stated that it would accept various collaterals for zSOL, including SOL (Solana), mSOL (Marinade Staked SOL), SAMO (Samoyed Coin), stSOL (Lido Staked SOL), and UXD (UXD Stablecoin). However, there are other requirements that users must follow. For instance, collaterals should be only Solana natives, and centralized entities shouldn’t control them.
Users will be able to mint or borrow zSOL at a 1.5% APY stability fee. But this value might change over time according to the DAO’s decision. The company wants to use zSOL for leveraged liquid staking, as well as short-selling. These strategies could bring high selling pressure on zSOL, though. So, the team will use a mechanism to ensure its peg stability.
What about the LP Token’s staking?
Token holders will be able to stake multiple LPFI on the LP staking pool. They will earn stability fees in the process. The team proposed some LP pairs for staking, such as zSOL – mSOL, zSOL – UXD, and zSOL – stSOL. However, investors can use various protocols to mint LP tokens. For example, they can stake zSOL – mSOL from both Lifinity and Raydium platforms.
Moreover, according to the team, incentivizing liquidity providers is the most straightforward way to enhance peg stability, as well as the scalability of zSOL. Still, every move has its drawbacks. In this case, incentivizing via liquidity mining could cause future scalability issues as it might potentially result in huge inflation on the governance token. But the company will take measures to prevent that.
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