Dolomite, the lending protocol for effective capital deployment, has introduced a collateral solution requiring one step: Zap. This innovative function allows DeFi customers to raise collateral against leveraged assets instantly. Zap is meant to shorten processing times and raise available funds by doing away with many intermediary steps.
Dolomite is an advanced lending protocol that allows Arbitrum network users to borrow against a wide variety of assets, some of which may not be available through alternative lending protocols. This consists of taking out loans against assets that produce income, such as the “GLP” liquidity token issued by GMX. The term “looping” refers to a multi-step procedure many users use to increase their production. To get 5x leverage on GLP, for instance, a user would have to deposit GLP as security, borrow against it, withdraw from Dolomite, then buy more GLP, and so on.
The customer is inefficiently overcollateralized because the maximum borrowing limit restricts the amount of capital that can be borrowed. While this safeguard protects the interests of lenders, savvy borrowers may want to take out a loan that exceeds the value of their collateral. The new Zap function in Dolomite makes this possible with a single tap, saving time and effort by eliminating the need for many separate transactions.
In addition to streamlining processes, Zap also offers a number of additional advantages. One such benefit is the elimination of the need to reverse the looping process in order to repay a loan secured by collateral. Users can also provide additional security in the form of non-liquid assets. In order to perform this function without limiting users to the liquidity provided by Dolomite, a DEX aggregator will be used.
On August 2nd, a new feature called Zap will go online, making life even easier for Arbitrum users while also expanding DeFi’s monetary potential. A key feature of decentralized finance is its composability, which is enhanced when users are able to leverage or hedge complex assets with a single click.
The user’s position will remain adequately collateralized because the entire Zap process occurs in a single transaction in the same block. Zap will establish Dolomite as the most cutting-edge lending protocol on Arbitrum and pave the path for more products based on these capabilities.