Summary

Decentralized finance (DeFi) aims to replace traditional banking systems. However, fixed-income, a fundamental part of financial systems, do not exist in DeFi.

The Issue

Three critical issues plague existing fixed yield solutions in DeFi

1. “Fixed” yields fluctuate throughout a user’s position.

2. Entering and exiting positions using automated market makers (AMMs) results in material slippage and, thus, a lower yield than stated, even with deep liquidity.

3. Complex protocols discourage users, who must carefully review documentation and develop meticulous strategies to avoid risking their time and funds.

Our Solution

Lila Finance employs a double-sided vault strategy connecting fixed-rate and variable-rate users. Fixed-rate users receive a fixed yield on their collateral paid by variable-rate users. Variable-rate users receive the actual yield generated from the fixed-rate users’ collateral. All users receive a tradeable non-fungible token (NFT) representing their position.

1. Fixed yields are guaranteed—variable rate users pay that interest upfront.

2. No slippage from entering/exiting positions—users receive NFTs instead of tokens and can trade positions using NFT markets.

3. Protocol displays a simple dashboard with a deposit and claim rewards page. Protocol recognizes user’s NFTs allowing seamless trading of positions.