EOL Candidate Proposal: Sturdy

EOL Allocation Candidate
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Introduction

Sturdy is a modular lending protocol that enables anyone to create a liquid money market for any token in hours.

By employing a novel two-tier architecture, Sturdy can isolate risk between pools without creating liquidity fragmentation. Sturdy’s base layer is made up of isolated lending pairs, which consist of a single lending asset and a single collateral asset. Pairs are immutable and permissionless to create and isolate risk. Built on top are aggregators, each of which has whitelisted pairs from the base layer.

Aggregators use Sturdy’s Bittensor subnet to determine allocation among whitelisted pairs to keep silos liquid and yield high. Users deposit to aggregators that fit their risk/reward profile, so they control which assets they’re exposed to without liquidity fragmentation

dApp: V2.sturdy.finance

Landing Page: sturdy.finance

Documentation: docs.sturdy.finance

Twitter: x.com/SturdyFinance

Sturdy Value Proposition

Today, users seeking passive yields by lending in DeFi have two options. On one end are permissioned pooled lending protocols (like Aave) that enshrine collateral assets at the protocol level and offer all users a single risk-reward profile. These protocols use governance processes to onboard new assets, forcing them to be conservative, given that all users are exposed to every collateral asset. On the other end of the spectrum are isolated lending protocols. Isolated lending offers permissionlessness and sovereign risk management at the risk of liquidity fragmentation and reduced lender UX.

Sturdy V2 uses a novel architecture to offer users the best of both worlds: no more choosing between permissionlessness and deep liquidity. Sturdy comprises two layers, with siloed lending pairs at the base layer and aggregators on top to unify liquidity.

This design is especially conducive to projects seeking to create their own lending markets. Currently, projects that want money markets for their assets must choose between drawn-out, requirement-laden governance processes and isolated lending with liquidity fragmentation. Sturdy enables anyone to permissionlessly create a money market in hours that’s liquid from Day 1, thanks to aggregators.

Audit History

Sturdy received audits from Zellic, Chain Security, and Spearbit. No critical issues were found, and all minor issues were resolved.

Full audit reports: docs.sturdy.finance/security-and-audits

Sturdy Fundraising

Sturdy raised $4 million in early 2022, led by Pantera and including contributions from Y Combinator and KuCoin Ventures.

Synergy
Sturdy currently provides great yields on assets such as weETH; weETH depositors on Sturdy’s Mode deployment earn staking/restaking yields, 3x Mode points, 3x Ether.fi points, and Eigenlayer points. Additionally, weETH depositors can borrow ETH against their deposit at up to 90% LTV. This can be recursively looped to earn up to 30x points from the aforementioned projects mentioned, or farm other projects.

The Sturdy infrastructure, with its novel two-tier architecture, is an ideal platform for quickly spinning up secure money markets as EOL onboards additional assets beyond weETH.

Sturdy’s permissionless deployment of aggregators and isolated silos enables EOL to craft customized strategies. Aggregators’ lending yields are optimized via the Sturdy subnet, while isolated siloes mean EOL can lever up to multiply yield and point allocations across numerous airdrop programs.

Conclusion

Sturdy’s architecture provides an ideal infrastructure for Mitosis’s goal of bootstrapping liquidity and benefiting from pooled liquidity, while providing the security of isolated lending. Sturdy routinely deploys on nascent blockchains to provide EOL with ample opportunities. With EOL’s backing, Sturdy can facilitate the growth of exciting blockchains and assets with unified liquidity.

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Sturdy’s innovative architecture and ability to deploy on emerging blockchains make it a potentially valuable partner for EOL. The protocol’s focus on providing liquidity without compromising on security or permissionlessness aligns with EOL’s objectives.

Based on the provided information, I am inclined to support the proposal for the following reasons:

Innovative Architecture: The two-tier system addresses key issues in DeFi lending, potentially offering a robust solution for liquidity and risk management.
Security and Audits: The comprehensive audit history and resolution of minor issues enhance the trustworthiness of the platform.
Strategic Synergy: Sturdy’s infrastructure and goals align well with EOL’s objectives, providing opportunities for mutual growth and benefit.
Reputable Backing: The support from well-known investors adds credibility and financial stability to the project.
Therefore, I recommend supporting Sturdy’s proposal for integration and collaboration with EOL.

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good proposition !!! keep building :slight_smile:

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Very interesting protocol.

I think your innovative approach is very clever, bringing the best of the two worlds (liquidity depth and controlled risk exposure) with the ability to choose the collateral assets you’re exposed to.

Developing a partnership with Sturdy would be in my opinion a very good use case for EOL.

One of the biggest challenges that lending protocols like Sturdy are facing at the start is finding liquidity to attract borrowers. EOL imo was built for this kind of protocols, it creates a win-win situation so lending protocols are definitely in the scope for EOL allocation. It would also be great to build a liquidity borrowing market for miAssets as collateral. But, with lending comes risks, and I believe not any lending protocol is suitable for EOL.

a) Case of permissioned pooled protocols

EOL by definition consists of multiple assets, that LPs are willing to deposit. If EOL is allocated to a permission based pooled protocol like AAVE, Mitosis assets get exposed to all that protocol assets, as OP explained. So Mitosis users lose control over their risk exposure, and I’m convinced that’s not something Mitosis community would accept.

b) Case of isolated lending protocols

On the other side of the market, isolated lending protocols offer less rewards and Mitosis EOL would be divided between the different asset pools, defeating the initial value proposition of EOL, which is to combine forces to have better bargaining power.

c) Sturdy’s approach

Sturdy seems to solve these problems for individual users, so it should also solve them for EOL. In an even greater way, as it allows Mitosis and its users to keep the risk governance instead of giving it to the protocol. Actually Mitosis could become one of Sturdy’s Aggregators, as they call it.

Also, Sturdy has the experience of the V1 and they are backed by well established VCs. Their different social accounts are active and filled with good content.
One attention point though, is that they suffered an exploit and lost 750k$ one year ago, but it looks like they handled it well.

Overall, I think it’s a great match and Mitosis could greatly benefit from this partnership.

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Would we be utilizing the loop here like Beefy finance? Not even sure if that’s possible at the moment :stuck_out_tongue:

I’m a little hesitant here just because I feel like it’s off to approve every single proposal, but I do appreciate the thorough security review here.

Note: I have used Sturdy, it was more complicated than your average borrow/lend dapp and I withdrew. That’s on me though :wink:

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"YES, that’s what I, and many other users, have been waiting for: a way to leverage mi assets. Many users are not yet using Mitosis because they find it unattractive compared to other places where they can leverage their LRT ETH. This proposition changes that, this would greatly increase Mitosis TVL.

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Sturdy employs an innovative two-tier architecture. Here are two key considerations:

  1. TVL is concentrated in Mode
  2. TVL is about 17M within Mode
    I would focus on the Mode chain for allocation and would aim to gradually increase liquidity such that borrowers gradually increase demand. This is preventing underutilization and would ensure higher yields.
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good addition so we can loop some miweETH.

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Sounds like a reasonable candidate!

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Sturdy and others… It would be beneficial for everyone if Mitosis grew and became more well-known. At this point, I observe that users, including us, are starting to get bored under platforms and Discord roles. I hope the team is aware of this as well. Thanks.

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great proposal, i think will open new opportunity for the future

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Just went through the proposal and the app. Very interesting IMO. I think both Mitosis and Sturdy could hugely benefit from each other!

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