back02 Aug 20234 min read
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DeFi’s First Fixed Rate Lending with Jet | Interview

It’s our honor to welcome back Jet Protocol to the DeFi scene after a tumultuous year for many. The Jet team emerges from stealth mode after months of heads-down work on a once-impossible lending product.

While decentralized borrowing and lending have been around for a long time, past models rely on algorithmic models for determining interest rates. Fully on-chain, order book-based lending models were a theoretical construct—until the release of Jet’s newest product, Fixed Rate.

Sophisticated lending markets with known, or “fixed” interest rates and maturities pave the way for more advanced trading strategies, bespoke structured solutions, and greater institutional adoption of DeFi. Pyth’s low-latency price data powers the Jet product suite and secures the user experience with fixed markets. We join the Jet team as they give us an overhead tour of the Jet product suite and their Fixed Rate marketplace.

Let’s start off with an introduction. What is Jet Protocol?

Jet Protocol is an open-source, non-custodial, borrowing, and lending protocol on the Solana blockchain.  Governed by the JetDAO, comprised of a community of DeFi contributors, developers, the Governance Committee, and $JET token holders. JET token is a native Solana-based SPL token. JET is a utility token that enables governance voting rights for token holders.

You've been hard at work in stealth mode. Welcome back! You've announced a new product for individuals and institutional users. What is it?

Jet’s newest launch is a protocol upgrade that compliments the rest of the Jet product suite —Fixed Rate. Fixed Rate is a first-of-its-kind marketplace for DeFi users to negotiate borrowing and lending interest rates in a central limit order book regardless of the amount of capital they would like to borrow or lend. DeFi users can reap the benefits of known interest rates and time periods, or tenors, which are unavailable in DeFi to date.

Fixed Rate users can benefit from market-driven interest rates, transparent tenors, and eliminate withdrawal risk due to utilization curves. And all of this on a non-custodial, open-source protocol (see Github here). Reliability, security, and risk management are at the forefront of Jet Protocol's priorities. The protocol undergoes regular audits conducted by Ottersec, a trusted top-tier auditing company. All audit reports are published publicly on the Jet documentation.

Initially launched markets for Fixed Rate are 1-day USDC, 30-day USDC, and 1 and 30-day SOL. Learn more about Fixed Rate and how it works with example orders in Jet’s documentation.

Fixed income on-chain has been missing from the space for a long time. It's not easy to build. How did you do it?

Jet’s Fixed Rate takes advantage of the unique infrastructure found only on Solana that permits speed and complexity in applications not possible on other blockchains. Jet’s product suite is centered around a powerful margin account and collateral management system. These two working in tandem permit users to harness capital efficiency and maximize returns by putting their assets to work for trading, lending, and borrowing purposes.

Jet’s product suite synergizes with variable pooled lending, fixed-rate lending, and a smart-routing spot leverage trading swaps application. This allows users to make leveraged trades through venues like Orca and OpenBook with transactions automatically routed through the cheapest path. Potential strategies are abundant and include pair trading, directional leverage trades, delta neutral strategies to harvest SOL staking yield utilizing LSD tokens, hedging, borrowing short-term and lending long-term, and more.

Tell us more about what Pyth data unlocked for your Fixed Rate product.

Pyth provides a continuous real-time price feed for every listed asset, such as SOL, MSOL, USDC, and WBTC.  Listing new asset types on Jet requires a Pyth oracle before that asset can be used for collateral and lending, borrowing, and swapping.

The oracle keeps Jet informed about the ever-changing prices of both SOL and WBTC, ensuring that the protocol is always calculating an accurate risk assessment of positions opened by users of the protocol.

Pyth's continuous price updates are the backbone of Jet Protocol, safeguarding assets and mitigating risk.  When it comes to borrowing SOL or USDC, precise calculations are vital, hence why Jet relies on Pyth's accurate price feed for these assets in fixed-term markets.

Pyth also has some useful bonus features, such as confidence intervals that help the protocol flag a warning if the price reported for an asset changes dramatically (and likely in error)

The Pyth oracle continuously provides the most up-to-date prices, enabling Jet Protocol to accurately assess a user's borrowing allowance. This ensures seamless and secure lending experiences on fixed markets.  Whether you're borrowing SOL or USDC, trust Pyth's reliable price data to determine your borrowing potential on Jet Protocol. Empowering you with transparency and flexibility.

What's your long-term goal, now that Jet is back in action?

Jet Protocol's long-term vision is to continue expanding the efficacy of the fixed-rate program model by providing more adapters to other protocols and tools that give users the ability to execute various strategies to earn yield from within a Jet margin account such as leveraged SOL staking with fixed and known costs, enabling more collateral types such as Orca LP positions, and giving users the tools to arbitrage rates between borrowing and lending platforms more easily (for example by enabling other protocol deposits as collateral on Jet and thus allowing lending and borrowing on other protocols from within a Jet margin account).

We can’t wait to hear what you think! Feel free to join the Pyth Discord and Telegram, follow Pyth on Twitter, and be the first to hear about what’s new in the Pyth ecosystem trough our newsletter. You can also learn more about Pyth here.

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