Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
This week, we cover Burrow Finance, NEAR’s top DeFi protocol, as they prepare for the upcoming release of Burrow V2 in 2024.
Did you know that Near currently ranks #1 among L1 blockchains for daily active addresses, meaning unique on-chain wallets interacting with protocols?
Source: Artemis Terminal
Within the NEAR DeFi ecosystem of $245M in deposited liquidity, Burrow Finance is the most popular lending and borrowing app with $181M TVL.
Burrow is a non-custodial, pool-based money market that enables users to supply assets to earn interest and to borrow against them to unlock liquidity.
Burrow is similar to Aave or Compound, but runs natively on the NEAR blockchain, a proof-of-stake L1.
Burrow aims to build liquidity for interest-bearing assets, especially staking derivatives such as stNEAR and stETH on Near.
For example, users can deposit stNEAR as collateral, borrow more NEAR, swap for stNEAR and redeposit to create a leveraged staking position, or even borrow a stablecoin to create a self-repaying loan.
Burrow V2 is still under development but promises a number of exciting enhancements to the protocol this year including:
- LPs supported as collateral
- Margin Trading in Q3, giving users the ability to trade with leverage
- Multichain support utilizing Near’s Chain Abstraction tech to connect Burrow seamlessly across multiple blockchains
Although Burrow has maintained its status within the NEAR ecosystem as the go-to lending and borrowing app, its native asset BRRR sits at a humble $5.6M FDV as of this post.
Today, I’ll cover how I can start bridging and lending stablecoins on Burrow for double-digit yield!
Bridging to NEAR and Lending Stablecoins on Burrow Finance
Before we get started, please be aware of these risks.
- Smart contract risk in any related DeFi protocol including Burrow
- Front-end spoof attack on any app frontend
- Oracle risks
- An economic design exploit
- Colluding signers on any multisig
- Illiquidity to withdraw stablecoins if pools are fully utilized
- Systemic risk across DeFi
- Depeg of a stablecoin
Here’s how I get started!
- First, I need a NEAR wallet like Meteor Wallet or the HERE Wallet. Assuming I have browser compatible wallet like these, I can go to the Rainbow Bridge here and connect my Ethereum Wallet, and my NEAR wallet to transfer a stablecoin or ETH, or any other supported token I want to lend on the Burrow app here. Based on Burrow’s higher stablecoin yields, I’ll follow the prompts to specify a token like FRAX, USDC, or USDT and confirm sending from my Ethereum wallet, which takes about 20 minutes to arrive in my NEAR wallet.
- Next, I go to the Burrow Finance app here and connect my NEAR wallet. I can choose the relevant lending market, assuming I bridged FRAX, USDC, or USDT based on the incentivized lending pools rewarding NEAR tokens. Let’s assume I bridged FRAX from Ethereum Mainnet so I’ll specify here how much FRAX to lend, click Supply, and follow the prompts in my wallet. I’m earning a base APY of 1.36% + bonus 10-15% APY in NEAR.
That’s it! I can now passively earn lending interest + NEAR rewards and return to the Burrow Dashboard here to claim my rewards and withdraw my lent…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
