DeFi on Sapphire: The Oasis Ecosystem Funding Initiative

As a cornerstone of the Oasis ecosystem, DeFi protocols built on Sapphire represent a key growth opportunity for privacy-preserving finance. To support these protocols, the Oasis Protocol Foundation (OPF) is designating funds from the OPF treasury to bootstrap growth and composability for DeFi on Sapphire. 

In keeping with the goal of promoting the development and adoption of the Oasis ecosystem dApps, this funding initiative is designed to input capital into DeFi primitives, contributing more than $10 million in liquidity to the broader ecosystem. In this way, the OPF aims to assist new and emerging projects on Oasis in overcoming barriers to market entry, providing more support so they can more effectively demonstrate their value propositions. 

Liquidity is the lifeblood of any DeFi protocol. It supports basic things like the ability to execute low-slippage transactions, facilitates price discovery, supports the launch of new native assets, and supports stability and functionality across the board. To address this critical need, these funds will benefit the core protocols on Sapphire, including Midas, Neby, Thorn, Accumulated Finance, and BitProtocol. These protocols were selected based on their fundamental importance to the ecosystem, technical readiness, and potential for composable growth. 

This added liquidity will be critical in indirectly supporting other ecosystem dApps, such as creating a better user experience for both native and cross-chain launches with DAOsis and creating smoother liquidation mechanisms for an upcoming confidential cross-chain lending and borrowing protocol. And it will also make it more efficient to move between positions, increase the utility of ROSE and other native assets in the ecosystem, and create a nice symbiosis between these money lego assets. 

For instance, BitProtocol allows users to mint BitUSD using Wrapped Staked ROSE as collateral. With this BitUSD, users can do things like:

• Swap for USDC on Thorn Protocol
• Pair with ROSE and add to pools on NEBY
• Use as leverage to buy more wstROSE
• Create a self-repaying loan where the APY of wstROSE exceeds the interest rate for minting BitUSD

Note - the above can also be done using mTBILL from Midas as a collateral source for minting bitUSD. Loans relying on mTBILL as collateral can have lower risk of liquidation due to the less volatile nature of mTBILL, and similar self repaying loan features if the mTBILL yield is higher than borrowing cost.

In order to exdcute this plan, the initial setup of all multi-sig wallets is complete, as well as internal monitoring systems, coordination with the relevant teams, etc. Once a final legal review is complete, this will provide a liquidity boost to the native DeFi primitives currently on Sapphire. These include ROSE, wstROSE, BitUSD, USDC, and soon mTBill. By addressing critical liquidity challenges today, we're enabling the next generation of privacy-preserving financial applications to flourish on Oasis.

This initiative is scheduled to start in Q1 2025.