Seamless Protocol is preparing to launch an Integrated Liquidity Market (ILM) on Lido for wrapped staked Ethereum (wstETH), offering a borrowing solution for tokenholders who want an alternative to traditional restaking.
The ILM will allow stakers on Lido to automatically employ a borrowing strategy and compound their positions on wstETH. This means that the returns from staked Ethereum (ETH) will be reinvested automatically, potentially increasing the rewards for users.
The key difference between this approach and restaking lies in the sophistication of the investment strategy. The Seamless protocol’s ILM actively manages users’ funds, allowing for low-collateral borrowing as the funds are kept within the ILMs. Restaking, on the other hand, involves reinvesting staked ETH without the use of advanced automated strategies.
On-chain lending serves various purposes, including providing leverage or liquidity for traders and long-term investors. The lending process on Seamless focuses on single-purpose loans, where the lender knows exactly how the liquidity will be used and the borrower cannot divert it for other purposes.
Seamless ensures transparency by conducting Borrowing Strategies on-chain through smart contracts, giving liquidity suppliers full visibility into how the funds are utilized.
To balance risk and enable lower collateral requirements, Seamless community members create and vote on strategies, which are then implemented through smart contracts.
The protocol, which was launched in mid-2023, was built on the Base network by developers from Seashell, RNG Labs, and Loreum Labs, as well as previous contributors from Uniswap, Aave, Ampleforth, and CertiK.
As of now, Seamless has a total value locked (TVL) of $41.91 million, with over $20 million borrowed on-chain since January.
Tokenholders who stake tokens or participate in decentralized finance protocols are typically exposed to risks, such as security vulnerabilities in smart contracts, market volatility, and regulatory uncertainty.