Decentralized finance (DeFi) was one of the breakout areas of the cryptocurrency market in 2021 and is set to facilitate mass adoption of cryptocurrencies in 2022. This comes as institutional and retail investors embrace the emergence of Finance 2.0.
One DeFi project that has started the year bullish is Ribbon Finance (RBN), a protocol that uses financial engineering to create structured products such as automated options strategies. These are designed to provide users with sustainable yields over time.
Data from Cointelegraph Markets Pro and TradingView shows that since trading as low as $1.83 on December 30, the price of RBN surged 146% to reach a daily high of $4.50 on January 3, as it reached a daily high of $4.50 on Jan. Hourly trading volume had risen to $60.6. One million.
Three reasons for the pace of RBN creation include the launch of Ribbon Finance V2, the addition of a new blockchain network to the Ribbon Finance ecosystem, and an increase in the total value locked on the Ribbon Finance protocol.
Ribbon V2 Launch
One of the biggest developments that helped accelerate price growth in RBN is the launch of Ribbon V2. Originally announced in August 2021, the project is slowly moving liquidity and building its pool while testing new features.
Reminder to transfer your position from V1 to V2 by Friday to be eligible for this week’s reward!
If you withdraw your funds from V1, you will be charged an exit fee, but migrating from V1 -> V2 is fee-free (in addition to gas charges)
— Ribbon Finance (@ribbonfinance) 3 January 2022
The upgrades that came with the V2 focused on the decentralization of ribbon vaults. This includes the ability to allow smart contracts to set the strike price for options sold by Vault. Additionally, the creation of an on-chain auction mechanism allows anyone to participate on the opposite side of the vault, rather than just whitelisted market makers.
Ribbon V2 also includes an upgrade to the protocol’s Vault accounting system. This includes the creation of governable vault parameters that allow RBN holders to determine the strategy that each vault deploys, as well as the management and performance fees that each vault requires.
These new upgrades should make Ribbon Finance more community-owned and also help increase the long-term returns offered.
Ribbon adds support for Avalanche
Another reason for the increase in RBN speeds is the recent support for the Avalanche (AVX) network. Includes a new AVAX Covered Call Vault where users can deposit AVAX and earn a yield of 24.18% at the time of writing.
According to the protocol, adding support for Avalanche is “the first step in Ribbon’s multi-chain future,” which suggests that the project plans to continue adding support for other networks as time goes on.
At the time of writing, there are 144,320 AVAX locks worth approximately $15.3 million on the Ribbon Finance Protocol.
related: What’s next for crypto and blockchain in 2022? Experts Answers, Part 3
Total value locked reaches a new high
The third sign indicating the increasing strength of Ribbon Finance is the total value locked on the protocol, which reached a new all-time high of $295.96 million on January 3, according to data from DeFi Lama.
The most recent significant boost to TVL came with support for Avalanche on December 15, 2021, and foreshadows the possibility of integrating support for other networks. This could potentially increase further in the future.
In addition to the AVAX Covered Call Vault, Ribbon Finance currently offers six different automated products on the Ethereum (ETH) network, including an AAVE covered call strategy, a stETH-collateralized ETH covered call strategy, a yvUSDC-collateralized ETH put selling strategy. Strategy, one involves ETH. Covered Call Strategy, WBTC Covered Call Strategy and ETH Put Sell Strategy.
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