Solana’s ALFPROTOCOL – A Platform with Leverage & Non-Leveraged Features
November 24 2021 - 11:48PM
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Alfprotocol is, in fact, a group of protocols created to provide
decentralized capital across and between investors and traders to
maximize the provision of liquidity with leverage and without. The
protocol will provide unleveraged products in the form of AlfMM (a
decentralized exchange service) and AAlf (an overcollateralized
borrowing service). On the other hand, the leveraged liquidity is
handled via one of Alfprotocol’s modules that communicates with
external protocols such as Solaris, Jet Protocol, and more expected
to be added in the future to provide leveraged products up to 200x.
Solana Makes Decentralized High Leverage Possible High leverage
positions were always a problem with other protocols that depended
on Ethereum’s “Proof-of-Work” (PoW) blockchain to power them.
Solana supports handling high leverage positions due to its robust
characteristics, namely transaction volume per second, which
significantly reduces transaction time (reaction time) in
comparison to the Ethereum network. The fast reaction time of
Solana’s Alfprotocol will allow it to safely handle position
liquidation just in time to safely cover the assets of the
liquidity provider with his allotted interest. Solana’s lighting
fast latency, which is 27.5 times faster than Ethereum’s, creates a
safer protocol for investors and the entire system, which will
depend on timely liquidation events, in case they happen,
especially for instances with higher leverage. Ethereum’s network
during congestions may also pose a risk for investors and traders
as transaction fees and time required skyrockets, in some cases
reaching $400 per transaction. Solana Is The Better Choice When It
Comes To High Leverage Liquidity Provisions Since high leverage
liquidity provisions’ viability solely depends on two factors,
volatility of the assets and the reaction time of the protocol to
liquidate unhealthy positions, it is imperative that the blockchain
characteristics would be an essential factor in deciding on which
is the most efficient blockchain. With that said, Solana handles
59,000 transactions per second (tps) compared to Ethereum’s 17
transactions per second and Cardano’s 250 transactions per second,
making it capable of succeeding the requirements of nowadays and
the potential needs of future demands. Alfprotocol’s potential lies
in its diversity and flexibility to meet the needs of all traders
and investors in a decentralized environment, with the security and
protection that the Solana blockchain offers. Alfprotocol is
currently in development. To find more info about the project and
stay updated with the project’s current progress, please visit the
website and check out the whitepaper.
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