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Inside scoop on Lybra Finance V2

May 30, 2023

In conclusion

If you’re here, chances are you’ve digested the previous article about Lybra. Perhaps, you’ve gone a step further to secure a stash of LBR tokens or maybe you’ve deposited stETH or ETH into Lybra, borrowed eUSD and are now relishing in the juicy yield rewards of 7-8% base APY on your minted stablecoin.

If this is you, you’re on the right path. And as a faithful Blocmates publication reader, we’ve got even more exciting things to share in this article. Brace yourself, because the brilliant minds at Lybra were so enamoured with our previous article that they have graciously granted us the exclusive privilege of being the first to reveal all the incredible things they have in store for version 2, complete with release dates. 

Okay, maybe not the first to reveal, but the next to reveal after they’ve done so. Whatever the case, get ready to be blown away!

Lybra Finance, since you first met her

In what could be described as a work of Houdini’s magic, Lybra has astounded us with their remarkable performance since the release of the previous article. Despite their sincere efforts to remain modest, we, on the contrary, feel compelled to herald their recent accomplishments with resounding praise akin to the triumphant blare of a trumpet.

Image source: dune dashboard/defimochi 

Beyond the LBR token’s upward trajectory, In such a short time, Lybra has received support from LSD enthusiasts and protocols alike, grown in TVL to the tune of over $60million I.e: ETH and stETH deposits into the protocol, paid out nearly $100k in real yield, witnessed an increase in token holders and governance token holders as well, launched a bug bounty program, gained multiple followers on Twitter and from keen observation, received organic support from people that can’t be classified as KOLs.

While all these achievements are astounding, we cannot shake the feeling that this is but the tip of the iceberg. Version 2 promises much better results with new additions, which we will cover in the next few headlines and paragraphs. Let’s dive in.

Lybra Version 2: What to expect 

We were privileged to take a peek through the curtains at version 2, and truly, it’s nothing short of incredible! The goal for Lybra is to expand into an LSD/stablecoin powerhouse. To achieve this, Lybra is bringing a few new things to the table:

Omnichain Lybra (weUSD)

Without a flipping doubt, the future of DeFi is omnichain! In V2, users will be able to deposit ETH/stETH and other LSTs too so long as it passes the sniff test, on ETH Mainnet and bridge borrowed eUSD to Arbitrum, received as wrapped eUSD (weUSD). 

Omnichain Lybra is tantamount to Lybra on steroids because it’s almost impossible to overlook the possibilities that an omnichain yield-bearing stablecoin would cause! The yield optimizers would sing for joy as they can create strategies that directly involve the eUSD or even go the length to create weUSD vaults. 

Lybra looks forward to achieving this via integration with LayerZero to power the omnichain infra and the transformation of eUSD and LBR into OFT (omnichain fungible tokens). Subsequently, Lybra would enable direct deposit of LSTs on any whitelisted chain and minting of eUSD on any chain. 

How would this work you may ask? eUSD bridging from Mainnet to Arbitrum will involve the swapping of eUSD for weUSD when a user attempts to bridge, and a corresponding lock of the weUSD in the weUSD pool (Magic Pool) on Ethereum. 

Support for other LSDs and LSTs 

Just like we mentioned in the previous article, Lybra won’t stop at stETH deposits but will extend to other LSTs and this is coming sooner than later. V2 will see Lybra support other LSTs such as rocket pool’s rETH, stETH2, wBETH, tapETH, swETH and many more, depending on the approval of the DAO.

What this means is that users will be able to deposit any of the approved LSDs in order to mint eUSD. It’s important to state that the process of accepting an LSD as collateral for eUSD is going to be quite stringent and the addition as well as the removal of newly included LSDs as well as future ones will be decided by the DAO. So expect the DAO to be quite active when version 2 goes live.

Tokenomics upgrade

Look! In a world where DeFi tokenomics can be the making and breaking of a protocol and where ingenious tokenomics designs are now recognized as pivotal for credibility and longevity, it becomes imperative for any ambitious protocol to treat its tokenomics with the utmost gravity.

Lybra wants to compete, thrive, and dominate, and so to this effect, a couple of changes to the tokenomics accompanies version 2. One such change is the burning of LBR to make the token deflationary. Also, due to institutional demand as a result of Lybra’s potential, the current core contributors will be reserving a small percentage of the total supply of LBR to service future partnerships. This reserve will also be vested for a year should the team consent to the biddings of any interested VC. 

Here’s what the new tokenomics would look like in version 2: 

Also, attention to all Genesis LBR token holders and liquidity providers:

If you haven't already transferred your Genesis LBR tokens to the updated contract or if you are still actively providing liquidity on the previous contract, it's highly recommended that you take action without delay. Waiting for a specific timeline might not be the best course of action. The team has decided to establish a firm deadline, following which a comprehensive snapshot of all LBR and eUSD holders on the V2 contract will be captured. To ensure your holdings are properly accounted for, it's advisable to act promptly and make the necessary moves.

One more thing, and yes! Still on the new tokenomics, the vesting period for esLBR will be increased by an extra 30 days, moving it to 60 days. This change will account for a linear vesting of 1.66% daily when converting from esLBR to LBR. The reason is that this approach controls emissions much better than before accounting for sustainability. On the other hand, everything else including the total supply of the token will remain the same. 

Mining update/Emission tweaks

This part is a wee bit technical, but trust us to simplify this in a way you can munch it like Ice Spice. A few lines above, we mentioned that in order to aid emission control (major cause of death of protocols), the LBR would be deflationary. Beyond this, other tweaks to the tokenomics as it relates to emission control, will be available in version 2 such as the introduction of dynamic liquidity provisioning otherwise called dLP.

The introduction of dLP will require users to maintain a minimum 5% threshold in locked Dynamic Liquidity relative to the total value of their loan (eUSD). LPers will only receive emission rewards so long as they contribute dLP tokens within the threshold. If they do not, they simply do not receive. For example, minting 5000 eUSD without contributing at least $250 of the LBR/ETH dLP will make such a user ineligible for emission rewards and vice versa. 

More so, if the value of the dLP falls below the threshold, the user will not qualify for subsequent emission rewards! A bit harsh, I know, but necessary for sustainability, don’t you think? To add, a bounty of the same amount as the user earned during their period of ineligibility will be made available for purchase at a 50% discount in LBR. 

I know what’s on your mind! What happens if it rises above the threshold? Well, the user resumes receiving emission rewards. Lybra also promises that subsequently, beyond web3, flexibility for esLBR locking will be introduced.

In the case of changes to mining and emissions, other mining pool incentives will remain at status quo although yields might be adjusted. 

A few other bits

The aforementioned can be viewed as the core bits and new additions for version 2. Nonetheless, other improvements are: 

> Improved user experience and user interface (basically, you might struggle to compare Lybra with Lido in terms of user interface). 

> The Lybra team is working towards launching the DAO right after version 2 thus putting the esLBR to good use. 

> Contracts will be audited and tested before Lybra V2 launch. 

> Continuous research to improve on the eUSD peg as well as maintaining and securing ecosystem partnerships. 

Wen Launch?

While you still enjoy V1 for now, v2 testnet is scheduled to launch in June 2023, while Mainnet will go live sometime in June/August 2023. 

Thoughts

Lybra’s growing popularity amongst the LSD protocols is a serendipitous blend of opportunity meets preparedness, and the team’s ambitions are akin to that of Alexander the Great! Quite daring! 

Version 2 is proof of an incredible feedback loop as most of the new additions are suggestions from an active community and genuinely concerned passerbys. 

Our confidence in Lybra's ability to seize LSDs, expand their TVL, and possibly dominate a substantial portion of the protocol is unwavering, all while prioritizing sustainability over hasty emissions. Who knows what remarkable feats they'll accomplish next?

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