Gravita: Borrow Interest-Free Against Staked ETH
Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned or any future Gravita token.
Two weeks ago, a new decentralized borrowing protocol built on Ethereum launched. Gravita aims to provide DeFi users with high-LTV, interest-free loans backed by ETH Liquid Staking Tokens (LST) and a Stability Pool (SP). Gravita Protocol is a friendly fork of Liquity, which is one of the most popular and most censorship-resistant, trustless protocols in DeFi. Gravita is self-described as “non-custodial and governance-minimized, with the goal of becoming immutable.” Here’s a breakdown of how it works below!
With Gravita, loans are issued in the form of minting GRAI, a USD-pegged stablecoin with similar volatility dampening mechanism as LUSD, and can be up to 90% of the value of a user's collateral, 99% in the case of bLUSD.
Like Liquity, Gravita uses a Stability Pool of GRAI to power efficient borrowing and timely liquidations. A 0.5% borrowing fee is charged upfront on each new debt (or debt increase) for borrowers for positions longer than 6 months. In order to incentivize short-term borrowing, the fee is refunded pro rata if the user repays their debt within six months (182 days) but the minimum fee is equivalent to one week worth of interest. Other than a 0.5% fee upfront, Gravita borrowers enjoy 0% interest!
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