With the recent boom of DeFi systems, new systems are launching weekly. Linear Finance is a new DeFi platform that hopes to increase inclusiveness and publicize the access to investment assets (digital and traditional). The platform hopes to become a disruptor in the industry with their non-custodial delta-one asset protocol.

There is tremendous potential and value that exists with investors being able to invest quickly. It allows them to save fees and secure assets at a fair market price. By combining the technical experience from crypto industry with the extensive knowledge in the financial industry, the team constructed one of the first DeFi projects built on the Binance Smart Chain (“BSC”) with EVM cross-compatibility. So the Linear platform will allow users to build and manage spot or portfolio exposures with a wide variety of digital and traditional financial projects. Furthermore, the protocol has unlimited liquidity and will assist in the creation of synthetic assets (Liquids) with zero slippage.

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Linear Protocol’s Backbone

The backbone to Linear’s protocol is the collateralized debt pool that is backed by the Linear token, DAI, and eventually other assets. So users who provide collateralized assets to the debt pool are able to create “Linear USD”. Linear USD can then be used to purchase other synthetic assets (Linear Liquids) on the exchange. The collateralized assets are then pooled to enable instantaneous liquidity and act as a counterparty. The Linear token will also act as a governance token allowing holders to vote on distribution models, future assets, oracle selection, pledging ratio, and more. The Linear Token holders in the debt pools will also receive a proportion of fees from the synthesization of assets.

LinearDAO

To facilitate the proper functioning of the Linear platform, the LinearDAO will be in place to overwatch the platform. So the LinearDAO will consider important functions and parameters of the platform including:

  • Pledge Ratios
  • LINA inflation rewards and frequency
  • Split of transaction fees including: burns, fee claims and Linear Reserve
  • New functionalities and technological roadmaps
  • Processing community proposals and voting to ensure best optimization for platform

The LINA Token:

All of Linear Finance’s protocols are made possible by the LINA token. So the token has a few purposes including: payment, staking, governance, liquidity mining, and investing in Liquids. 

So to create the LINA Token, users have to pledge “100%” of their digital assets meaning collateralization. The purpose of this is to ensure that the Liquids are backed by an underlying asset. This creates stability from possible volatile synthetic assets. So in the future, LinearDAO is able to reduce the requirements as deemed necessary. 

Collateralization

When it comes to collateralization, Buildr, the decetnralized dApp, takes a hybrid approach. To generate a synthetic asset, users need to deposit a mixture of LINA and other cryptocurrencies. The ratio must be 80:20 where 80% of the collateral must be LINA and the other 20% is other cryptocurrencies.

Staking

Staking is a crucial part of what Linear Finance ($LINA) is. There are various incentives in place to incentivize users to stake their LINA tokens. Users are able to earn rewards via:

Exchange Fees Rewards:

Currently, the initial transaction fee collected from users on the Linear platform is set at 0.25%. These fees are then distributed to LINA stakers at a pro-rata basis if their Pledge Ratio (P ratio) is above the threshold. For non-LINA stakers, the rewards may also be available depending on the decision of the community’s governance council in the future.

Inflationatory Rewards:

As of right now, the starting inflation rate is at 75% which will diminish on a weekly basis of 1.5%. Stakers will be able to receive such rewards weekly as well if their P ratio is above the threshold. 

Yield Farming Campaign Rewards

With the explosion of yield farming and the DeFi market, Linear has also added the crucial element of yield farming. Yield farmers will help maintain Linear’s debt pools and the whole platform, itself. During the first two years of the platform, users who are active on the exchanges can receive token bonuses. All of these token bonuses will then be able to be transferred into other liquidity pools like Balancer, Curve, and Uniswap.

So how can you get LINA Tokens?

Normal Users:

  1. Get LINA tokens via fiat payment gateway partners
  2. Staking LINA tokens via Buildr to build “l”USD
  3. Get Liquids exposure using “l”USD and exchanging among different Liquids via Linear.Exchange
  4. Claim the transaction split and inflationary reward
  5. Convert the Liquids exposure back to “l”USD
  6. Burning the “l”USD to unlock the staked LINA tokens

Market Makers:

  1. Get LINA tokens via fiat payment gateway partners
  2. Staking LINA tokens via Buildr to build “l”USD
  3. Depending on net position of a particular Liquid, marketmaker can help stabilize the debt pool by going the other way; example: long position of “l”XAU, marketmaker goes short on XAU
  4. Linear will incentivize the marketmaker to act by giving extra yield (LINA token) with the inflation reward and transaction split for their efforts in stabilizing the debt pool

The Linear.Exchange

In order to solve the fundamental issues of speed and interoperability of many traditional crypto exchanges, Linear created their own exchange in hopes of addressing key issues. The team created a platform where transactions will occur faster with almost unlimited liquidity. The exchange will allow the Liquid settlement time to be lower down to seconds with the help of blockchain technology (compared to T+2 in traditional securities).

Linear is currently working with BSC to lower the settlement timeframe as it has a blocktime as low as 1 second as well as instant finality. Linear.Exchange is able to combine the best of both worlds: infrastructure of Ethereum, high TPS of BSC, and the most looked for tooling. Another benefit of the system is that when creating Liquid there will be minimal transaction fees as compared to traditional gas fees paid on Ethereum. With the platform’s BSC-based oracle, it will allow quick refreshment of fees in seconds while benefiting from lower fees. 

Conclusion

With the ever rising ETH gas prices and the emergence of DeFi systems, problems of costs and speed are being challenged daily. Linear proves to be a promising solution to all these issues that the industry currently faces. The Linear platform allows users to build and manage investments easily, while allowing them to simultaneously enjoy the low costs and fast transactions. In the spirit of decentralized finances, the platform also has its own governance system that is for the users, but more importantly built by the users.

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