We are excited to work the SushiSwap community and to introduce to them MahaLend; A decentralized money market that allows users to leverage their DeFi yields using stablecoins.
We accept a wide range of DeFi tokens, and we’re looking to accept SushiSwap’s LP tokens as collateral in our protocol and work closely with the community on this.
The benefits to SushiSwap holders are the following:
- 30% Revenue share from borrowing fees on the protocol.
- Increased liquidity to SushiSwap.
- MAHA rewards on top of existing SUSHI rewards.
How Does MahaLend Work?
MahaLend is a lending protocol that works very similar to Aave V3 but with a key difference in that, we accept LP tokens as collateral.
This means that anyone looking to leverage on their LP yields can simply deposit their LP tokens as collateral on MahaLend, borrow stablecoins against it and use it to possibly get more exposure to the same LP.
This effectively allows users to leverage their LP yields by a factor of 5-10x.
For stable LP farms (like USDT/USDC) we can allow users to borrow stablecoins and ETH up to a TVL of 90% which effectively allows them to take up to 10x leverage. For volatile LP farms (like ETH/USDC) we can allow users to borrow up to a TVL of 80% which effectively allows them to take up to 5x leverage.
The table below showcases the kind of yields users could be earning on MahaLend.
|Farm||SushiSwap APR (in SUSHI)||Leverage Offered||MahaLend Leveraged APR (in SUSHI + MAHA)|
|USDT/USDC 0.01%||7.36%||10x (Stable)||70.36% + MAHA APR|
|ETH/USDC 0.3%||9.30%||5x (Volatile)||46.5% + MAHA APR|
|ETH/ARB 0.3%||13.9%||5x (Volatile)||70% + MAHA APR|
The trade-off here is that whenever a user leverages on MahaLend, they have to pay borrowing fees for the number of stablecoins they borrow. This borrowing fee is typically less than the APR they’re earning so in most cases the leveraged users are in a net positive and earning a higher APR than before.
For most of the OGs familiar with AlphaHomora V2, MahaLend works similarly but a key difference being that we use the Aave V3 codebase to build the lending and borrowing functionalities. This means we have much greater control of the risks within MahaLend and avoid an AlphaHomora/Iron Bank-type situation where the underlying lending protocol collapses.
What are the Risks Involved?
Like any new innovative DeFi protocol, there are always some risks involved and I believe it is important to be upfront about it.
Smart contract risks: The MahaLend protocol although a fork of Aave has some modifications that allow borrowers and lenders to stake their LP tokens as collateral whilst also earning SUSHI rewards from the MasterChef contract.
Our code has been audited (with more upcoming audits coming in) and we also have insurance and we have an active bug bounty program. However, we would never recommend anyone to put their your entire life savings into the protocol.
Liquidation risks: LP tokens that contain volatile assets might get liquidated if the underlying collateral value drops too low. In this case, users need to simply monitor their health factors from time to time to make sure that their positions stay healthy and they are well above the liquidation threshold.
The more leverage you take, the higher your chance of getting liquidated (but of course the higher your rewards).
For stablecoin LP pairs, this risk is low but sometimes when the stablecoin loses its peg (like in the case of USDC last March) then the LP value can drop and liquidations can happen again.
We maintain a full list of all the various risks involved in our documentation and I think it’s important for any DAO-to-DAO collaboration to be upfront with these risks. Risk Framework - MahaLend
What’s in it for SushiSwap?
This is the exciting bit .
We’d like to offer the sushi community a 30% revenue share from any borrowing fees and any liquidations paid to the Sushi treasury.
Besides this, MahaLend will allow SushiSwap to benefit from the following:
- Increased liquidity for Sushiswap from people borrowing and leveraging their yields.
- More interest from APY farmers who are always looking for ways to increase their yields.
Furthermore, we’d like to offer some MAHA rewards to LPs that participate in the Sushi Pools on MahaLend. This means that LPs will not just earn trading fees and Sushi rewards but also MAHA as well.
MAHA is the governance token for MahaDAO and this will also allow the Sushi holders to get a stake within the MahaDAO ecosystem.
Specification: What we’d like to ask from the Sushi community
In terms of our asks, it’s quite simple. We would like to hear from the community on a few things:
Farms Feedback; Know what kinds of Sushi farms you guys are looking to leverage. Are you guys looking for stable farms like USDC/USDT or are you okay with a bit more volatile farms like ETH/USDC?
It’d be great if you can let us know what farms you’d be excited to see in this protocol.
Product Feedback: Possibly understand any other use cases better. It’d be great if we can speak to some of you guys either to learn more about how we can this better. We’ve made this Typeform for those of you keen MahaLend Leverage Invitation
Cross-marketing Support: It’d be awesome if we could grow this together. The team would be open to adding in more pools and finding more ways to increase the SushiSwap liquidity. Things like Retweets and AMAs go a long way.
Sushi Emissions (later on): Possibly some SUSHI rewards in the future <3: After the protocol matures and we can successfully drive some liquidity, we’d love to have some SUSHI emissions go out for MahaLend.
But this is only after a few months down the line, once we can showcase that the protocol can contribute positively to the SushiSwap community.
I hope that the asks are fair and they align with the Sushi community’s ideologies and vision.
We have mad respect for the Sushi community and we’d like to support Jared’s vision of making SushiSwap profitable.
With the rev share opportunities and leverage utilities offered by MahaLend, I hope that we can positively contribute to the Sushi community.
Collaborate with the MahaLend team and rev share with the Sushi Community