Whether you are an experienced DeFi enthusiast or a "Degen" who hopes to optimize returns in a changing market environment, in this decentralized capital market, do you value capital efficiency? Fund security? Or position flexibility?

Assuming that the DeFi protocol has undergone very strict audits, added real-time active attack protection and monitoring, and the security of funds is guaranteed, have you ever thought about having an ultra-capital-efficient and flexible lending market that allows you to manage your positions with maximum flexibility according to the current highest-yielding leverage opportunities, such as LSTs, LRTs, and yield-based stablecoins?

The lending market is often considered to be a relatively dull part of DeFi—long-term holdings with little need for monitoring. This is also the main reason why some head protocols have high liquidity in the DeFi market. The first-mover advantage not only builds a high wall of user experience based on liquidity, but also shapes user habits.

Despite this, existing lending market protocols are still insufficient in satisfying users who seek extreme flexibility. Sumer Money sees this and strives to create an option for DeFi users that can balance capital efficiency, security, and flexibility.

Before we dive into the specific implementation, let’s first understand how the design of liquidity pools affects capital efficiency in the current multi-chain DeFi environment.

Liquidity pool design in DeFi protocols is the core of capital efficiency

DeFi protocols rely on liquidity pools to operate - but for the same assets, more independent pools often mean liquidity fragmentation, resulting in lower capital utilization and a worse user experience for both trading and providing liquidity.

DEX protocols such as Uniswap v4 and Balancer v2 have all introduced innovative designs of shared liquidity pools in the DEX field to reduce liquidity fragmentation. However, the same innovation has not yet been applied to the design of lending pools.

Compared with shared liquidity pools, independent liquidity pools have significant advantages in reducing long-tail asset risks. However, when it comes to mainstream assets like ETH, BTC, and USD and related assets, independent liquidity pools often lead to unnecessary liquidity fragmentation without corresponding risk reduction. These mainstream assets are precisely the most important assets in the lending market.

Capital Efficiency in Multi-Chain DeFi: Combining and Managing Cross-Chain Assets

The typical DeFi user usually faces an extremely steep learning curve when shuttling between different chains and finding the right tokens, bridge tools, and yield opportunities. Usually, these yield opportunities come at the cost of asset security because they require interacting with bridge tools and DeFi protocols on multiple chains, not to mention the opportunity cost of users losing earnings on the original chain when crossing chains.

Design of Sumer Money

1. Shared liquidity pools for improved capital efficiency

Sumer introduces a new risk control engine that automatically considers the correlation between assets when assessing risks. Traditional lending protocols usually start from the asset side and statically determine the user's borrowing capacity based on the current value of the user's mortgaged assets. Sumer intelligently matches the user's mortgaged assets and loaned assets based on the correlation of assets, and automatically matches higher loan amounts to highly correlated mortgage loan combinations, thereby helping users maximize their borrowing capacity without increasing risks. For example, in a user's position, if there are associated assets (such as depositing wstETH and borrowing ETH), Sumer will automatically adapt to a higher LTV (loan-to-deposit value ratio) to maximize capital efficiency and asset utilization.

In order to achieve the same goal of optimizing LTV, many lending protocols need to set up separate liquidity pools for different asset-collateralized lending combinations, which will cause liquidity fragmentation and make savings and lending users face more and more complex choices. Sumer's design merges the liquidity pools of related assets and non-related assets into a shared liquidity pool, greatly improving users' capital efficiency and flexibility.

In addition, Sumer can also combine assets at will based on their relevance and liquidity, and flexibly adjust these combinations as the liquidity of assets changes.

Here are some examples of lending in Aave E-mode, independent lending protocols, and Sumer:

2. Flexibility in user position management

The following are the position management methods of Aave e-mode, independent lending protocols and Sumer in four typical DeFi scenarios:

It is clear that Sumer’s capital-efficient unified liquidity pool provides considerable flexibility in position management compared to existing lending protocols.

3.Sumer Money (Money Multiplier)

In traditional finance, there is a concept of money multiplier. Banks can use the assets deposited by depositors in banks to lend to users with capital needs, thereby increasing the market's money supply and creating money multipliers like M2 and M3. Sumer draws inspiration from this. Users can now use their deposits in Sumer as collateral to create synthetic suUSD, suETH and suBTC. These su tokens are like Visa debit cards given by banks to users. Users deposit funds in the Sumer application of this chain and retain all DeFi income (staking, re-staking, lending) on ​​this chain. The su token can be used in other chains and new ecosystems, achieving a seamless experience in the full-chain DeFi, allowing users to participate in new ecosystems without worrying about the opportunity cost of funds on the original chain.

Sumer's shared liquidity pool generates su tokens that support full-chain DeFi with linked assets at up to 98.5% LTV at no additional cost. These su tokens can transmit settlement information to supported networks through cross-chain messages from partners such as Chainlink CCIP and LayerZero.

Sumer uses its unique intelligent risk control engine to merge scenarios that originally required multiple different protocols (high-correlation asset lending, low-correlation lending, collateralized stablecoins/synthetic assets, cross-chain bridge liquidity protocols) and multiple independent liquidity pools into one protocol and liquidity pool without increasing risks. Users can participate in the staking and DeFi activities of the new chain through the su tokens generated by Sumer's collateral without losing all DeFi income on the original chain.

In addition, according to Sumer's AMA with zkLink Nova, Sumer mentioned that its su token has the potential to become a composable module in the full-chain DeFi ecosystem. In the near future, su tokens will gain more application scenarios and benefits through Sumer's own L1. The Sumer team will also contribute to the Cosmos community a consensus engine that is compatible with the existing Cosmos SDK, but with higher performance and decentralization, and better support for EVM and parallel EVM. This engine, called "Supernova Core", will focus on providing a Web2-level user experience in a highly decentralized network. In addition, the Sumer token will serve as the PoS token of the Sumer chain, while capturing transaction fees and lending income generated by DeFi and on-chain transactions.

At present, Sumer has just released its own points system, and the TVL of the entire chain is about 6 million US dollars. However, in order to make the envisioned capital efficiency flywheel turn, it is obviously necessary to accumulate deeper liquidity, otherwise it will be difficult for users to experience a complete DeFi closed loop on the product side, which is also one of the biggest challenges facing Sumer. At the same time, the time of Sumer's TGE has not yet been announced, and how to make good use of the expectations of the native token will also be the key to whether it can attract more liquidity.