Vesta Finance: A More Scalable Arbitrum-Native Stablecoin
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Vesta Finance: A More Scalable Arbitrum-Native Stablecoin
Vesta Finance, backed by the founder of Frax, is one of the most overlooked projects on Arbitrum.
Navigating Web3 tides with focused insightsWritten by: The DeFi Investor
Compiled by: TechFlow
Vesta Finance, a project backed by the founder of Frax, is one of the most overlooked projects on Arbitrum. The team is building $VST, a native decentralized stablecoin from Arbitrum.
Vesta is defined as a collateralized debt platform. Users can lock up collateral and mint Vesta’s stablecoin $VST by paying only a one-time minting fee. To ensure the protocol does not accumulate bad debt, the team has implemented a Stability Pool.
Users can deposit $VST into the Stability Pool to earn a share of liquidation penalties and seized collateral in return for their $VST. The Stability Pool has proven to be a highly effective mechanism for handling liquidations, especially during volatile market conditions.
But if you're familiar with Liquity, you might say Vesta looks very similar. However, unlike Liquity, Vesta also allows:
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Multiple types of collateral to mint $VST;
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Yielding assets to be used as collateral;
Are you an investor in $GMX?
Allowing yielding assets as collateral means Vesta lets you use $GMX to mint $VST—completely fee-free! Moreover, Vesta invests your GMX on your behalf and returns 80% of the GMX yield earnings to you in $ETH.
However, you won't receive esGMX rewards at this time. But the team says they are working on a solution that will allow GMX depositors to claim esGMX rewards as well.
Vesta charges a 20% platform fee, so you can borrow $VST against $GMX while earning nearly 15% annual yield.
$VSTA has a market cap of $8 million, with only 10% of its total supply currently circulating. Right now, $VSTA is purely a governance token, so Vesta's success isn't necessarily tied to an increase in token price. The team plans to launch a staking module in the future.
The project also has a highly ambitious roadmap:
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Leveraged trading interface;
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An internal DEX aggregator;
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Flexible liquidations;
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Collateral locking system;
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$VSTA staking module;
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More collateral types;
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Multi-chain expansion;
One more thing to keep in mind: when considering investment, remember that only a small portion of the $VSTA supply is currently circulating, meaning inflation could remain high.
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The DeFi Investor
