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Greenwood V1 is an automated market maker for cryptocurrency interest rate swaps built on Ethereum. Traders can fix their lending and borrowing rates, and liquidity providers collect a fee on each swap.
Disclaimer; Greenwood V1 is unaudited. If you choose to interact with our smart contracts in any way, please do so with the understanding that your assets are at risk of being irreversibly lost.
You are probably losing money.
It wasn’t long ago that decentralized lending protocols emerged, giving us the ability to earn interest on our cryptocurrencies. But, because crypto interest rates on the most prominent lending protocols change every few seconds, lenders can’t calculate their expected returns and borrowers don’t know what they will have to pay back before taking on debt.
Traditional finance has largely solved this problem. In many parts of the world, you can just go to a bank for a fixed interest loan. That’s because banks use interest rate swaps to cancel out, and even profit from, the risks associated with offering fixed-rate loans.
So why don’t crypto owners have the ability to fix the interest rate payments on their existing variable-rate loans? We like to imagine a future in which people can take out a mortgage with their crypto assets. But, who is going to borrow $300,000 in DAI when interest rates change every day?
Greenwood was built to solve this problem.
For the past few months, we have been working on solving the problem of interest rate volatility in decentralized money market protocols. Here are some of the things we’ve learned along the way:
Interest rate swaps for cryptocurrencies exist, but they aren’t great.
- Peer to peer exchanges are illiquid unless a critical mass of globally distributed users are always trading.
- Custodial exchanges require you to trust that the exchange won’t lose or steal your assets.
You should always be able to lock your existing crypto lending and borrowing rates while keeping control of your assets.
Fixed-rate lending protocols haven’t solved the problem.
- Fragmented fixed-rate lending protocols don’t allow traders to protect their open positions on competing platforms.
- Expensive switching costs don’t allow borrowers to migrate their existing positions from competing floating-rate protocols. Transferring a loan from one protocol to another means repaying the original loan with interest.
You should have access to fixed or floating interest rates from multiple protocols based on your specific cryptocurrency lending and borrowing needs.
Automation is the key.
Interest rates on decentralized lending protocols change with every block, which means interest rate swap orders must be filled quickly before they go stale. In order to ensure deep liquidity and efficient price discovery in such a volatile market, we decided to build an automated market maker for cryptocurrency interest rate swaps based on Max Wolff’s Rho Protocol. The Greenwood automated market maker runs 24 hours a day, 7 days a week, 365 days of the year, and the interest rate model that powers the automated market maker can be benchmarked to any lending protocol’s fixed or variable interest rate on any cryptocurrency. This means:
- Our AMM is always willing to quote a rate for a swap, so you never have to wait for a counterparty.
- Greenwood enables you to trade interest rate swaps on a wide range of assets across numerous protocols.
We’re here for the long haul.
We believe in a robust and inclusive crypto economy, which is why we are hard at work to deliver this crucial financial tool to as many people as possible. Currently, Greenwood Interest rate swaps are available for the largest Compound stablecoin markets (DAI, USDC, USDT). We will be expanding to the remaining Compound markets, as well as other decentralized lending protocols like Aave and C.R.E.A.M, over the coming weeks and months.
If you’re ready to start trading you can access Greenwood V1 at greenwood.finance. If you have any questions, comments, or suggestions feel free to send us a message on Twitter @GreenwoodLabs, join our Discord, or email us at email@example.com.