Dolomite, the lending protocol for efficient capital deployment, has announced Zap, a one-step collateral solution. This first-of-its-kind feature enables DeFi users to increase their collateral against leveraged assets on demand. By eliminating multiple hops normally associated with the process, Zap is designed to save time while increasing available liquidity.
Users on the Arbitrum network have the ability to borrow against a wide range of assets using Dolomites advanced lending protocol, often including assets not found on other lending protocols. This includes borrowing against yield-generating assets such as GMXs GLP liquidity token. Users commonly participate in looping to maximize their yield, a process that entails multiple steps. For example, to obtain 5x leverage on GLP, a user must deposit GLP as collateral, borrow against it, withdraw from Dolomite, obtain more GLP, and repeat the process several times.
This inefficiency is due to the maximum borrowing limit that restricts the amount of capital that can be borrowed so that the user is always overcollateralized. While this provision is in place for the safety of lenders, there are occasions when experienced users may wish to borrow more than the value of their collateral. Dolomites new Zap feature allows this to be achieved in a single step, delivering greater efficiency by removing the need to make multiple transactions.
In addition to eliminating unnecessary steps, Zap delivers other benefits. These include the ability to pay off debt using collateral rather than having to unwind a borrow position by reversing the looping process. Additionally, users will be able to add collateral in the form of assets they aren't currently holding. This feature will be implemented with the aid of a DEX aggregator, ensuring that users arent constrained by the liquidity available on Dolomite.
The introduction of Zap, scheduled to go live on August 8, will add convenience for Arbitrum users while further extending the capabilities of DeFi money markets. Allowing users to leverage or hedge complex assets in a single click provides greater utility and augments the composability that is integral to decentralized finance.
The Zap process is completed in a single transaction that takes place in the same block, ensuring the users position remains sufficiently collateralized. Zap will pave the way for further products that Dolomite is developing based upon this capability while cementing its position as the most innovative lending protocol on Arbitrum.
Dolomite allows users to unlock dormant capital by smarter borrowing and lending. It enables smarter asset deployment through powerful integrations across the DeFi ecosystem. Dolomite's advanced architecture supports separate borrow positions from a single wallet, each with a distinct risk profile. Its unique design allows for a broad range of yield-bearing assets to be used as collateral, helping users earn rewards while borrowing against these assets.
Learn more: https://dolomite.io/
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