What Is Defrost Finance (H2O) ? Complete Guide & Review About Defrost Finance

What Is Defrost Finance (H2O) ?

Defrost Finance (www.defrost.finance) is a decentralized protocol that allows you to utilise liquidity pool (LP) tokens and other pool tokens from various Avalanche and cross-chain protocols as collateral for generating H2O, a soft-pegged stablecoin native to the Avalanche ecosystem. Finance helps users improve capital efficiency from assets locked in pools or vaults. Defrost Finance allows users to provide liquidity to gain additional yields from features such as farming, borrowing, staking, swap, and bridge support for convenience when trading.

Defrost Finance gives birth to H2O, which is backed by existing collateral with a soft peg to 1 USD. H2O can be minted by depositing collateral such as liquidity provider tokens from AMM (automated market maker) dexes (decentralised exchanges), lending, and other DeFi protocols. The project envisions creating a stablecoin that is not USD-backed and at the same time releases more liquidity from Liquidity Provider tokens (LP tokens). LP tokens collected from different chains and protocols can be used as collateral for minting H2O. The minting and burning are fully controlled by smart contracts. The overall mechanism is based on trustless and decentralized cross-chain functions/bridges.

Defrost Finance (H2O) Storage Key Points

Unfreeze Your Way to Wealth

Defrost Finance is the platform behind the next generation stablecoin and provides remunerative investment opportunities. A fully fair launch, decentralized project, its aim is to change the world of finance for good.

A New Stablecoin Minted with LP Tokens

Defrost Finance Backed by Liquidity Provisions tokens, H2O is the stablecoin of the future, maintaining a 1:1 peg to the US dollar at all times. It is safely overcollateralized and capable of powering any financial instrument

Get Your MELT and Join Defrost

Defrost Finance is a community-based project. Participants can deposit their assets in Liquidity Pools from swaps and mint H2O to acquire MELT, the platform’s governance token. This not only allows you to stake assets but gives you a seat at the table when decisions are made.

Security

Multi-Signature Control

Defrost Finance The contracts were audited by Certik in November 2021. As for the centralization problem, it is solved by the Multi-Signature Controlling Account. There are five Multi-Signature Keyholders, controlled by Avatar, Wanlabs and the team separately. Defrost Finance will further diversify the centralization as the DAO is formed.

Non-upgradable Contracts

All contracts of Defrost Finance cannot be upgraded. The manipulation by the contract manager becomes impossible.

The Reserve Pool

Defrost Finance is maintaining a Reserve Pool, as the insurance for the protocol safety. The H2O assets in the Reserve Pool are collected from the Stability Fees and Liquidation Penalty. In cases when the protocol fails to liquidate the vaults falling below the Minumum Collateral Ratio, or some other scenarios leading to the protocol deficit, the Reserve Pool will take the responsibility as the compensation.

Price Feeds

Defrost Finance has partnered with Chainlink, the leading decentralized blockchain data provider for bringing off-chain data to smart contracts on Avalanche. Chainlink is a decentralized oracle network that enables smart contracts to securely access off-chain data feeds, web APIs, and traditional bank payments. It is well known for providing highly secure and reliable oracles.

Choice of Collaterals

Defrost Finance is initially choosing LP tokens from well-known Dexes, like Trader Joe and Pangolin, as the collateral for minting H2O. The chosen LP tokens are with deep liquidity and proven preservation of value. The same principle will be applied in deciding the later cross-chain assets as the collateral from other chains.