Stella is an innovative leveraged strategies protocol that enables zero cost borrowing through realigned lender and borrower incentives.
Stella revolutionizes the DeFi lending and borrowing landscape with its Pay-As-You-Earn (PAYE) model, effectively nullifying the traditional borrowing costs associated with leveraged DeFi strategies. This model is distinct in that it focuses on yield sharing between two primary user groups: lenders (contributors to the lending pool) and leveragers (borrowers leveraging DeFi strategies). Stella Strategy: At the heart of Stella's operations are the leveragers who engage in various leveraged strategies built atop multiple DeFi protocols. Unlike traditional lending models where borrowers are charged interest based on loan utilization, Stella's leveragers are exempt from any borrowing cost. Instead, they share a portion of the yield they generate upon closing their positions. This unique approach ensures that if leveragers don't realize any gains, they're not burdened with additional costs beyond repaying the borrowed amount. The range of strategies available caters to different risk appetites and market outlooks, from aggressive high-yield strategies (Hyper-Strategy) to more conservative, established approaches (Standard Strategy). Stella Lend: On the other side of the equation are the lenders, who provide the liquidity necessary for these leveraged positions. Lenders deposit their assets into Stella's lending pools and, in return, receive a share of the yields generated by the leveragers' strategies. This setup allows lenders to potentially earn higher returns than standard lending protocols, as the lending APY isn't capped and is directly tied to the success of the leveragers' strategies. Moreover, Stella Lend's system is designed for simplicity and ease, allowing lenders to earn passive income without needing to understand the complexities of the leveraged strategies being employed. To maintain the protocol's sustainability and reward lenders for their liquidity contributions, Stella implements a 30-day expiry on positions. This mechanism ensures that positions are actively managed and that yields are realized and distributed within a reasonable timeframe, aligning with the PAYE model.
Stella earns revenue by collecting a portion of the yields generated by leveragers. Specifically, 25% of these shared yields are taken as protocol fees. Half of these fees are distributed to ALPHA stakers, while the other half goes to depositors of Alpha Homora.
As a user of Stella, you can earn money in two primary ways. As a leverager, by executing leveraged strategies without borrowing costs, you can potentially earn higher yields. However, a portion of your yield will be shared with lenders. As a lender, by lending your assets on Stella Lend, you receive a share of the yields generated by leveragers. This could potentially offer higher returns than traditional lending protocols, given the absence of a cap on lending APY.