Our ReFi Lending Model for Ecological Assets Wins Aave Challenge

TLDR:

We are thrilled to announce our recent success at the EthPrague Hackathon, where we won the Aave Challenge. Our dedicated team, led by Umee’s principle engineer Robert Zaremba, worked tirelessly to create the first-ever Regenerative Finance (ReFi) lending model, integrating it with Aave's new synthetic stablecoin, Gho. This model aims to tackle the important issues of climate change and financial turbulence by enabling investments in ecological assets while maintaining liquidity. The ReFi lending model is implemented on the top of the leverage module of the Umee blockchain. This blog dives deeper into the innovative project and its potential impact.

Investing in Ecological Assets:

The urgency of addressing climate change has never been more evident. The core objective here is to develop path breaking financial products which also contribute to a sustainable future. By investing in ecological assets, individuals benefit from long-term value growth while aligning their financial goals with environmental preservation. The ReFi lending model allows users to invest in ecological assets without sacrificing liquidity, offering them leverage and the chance to reinvest, fostering a sustainable world for future generations.

Backing Gho Stablecoin with Real-World Assets:

In addition to addressing climate change, we recognize the need for a stablecoin backed by tangible real-world assets. To achieve this, we propose backing Aave's Gho stablecoin with ecological assets such as carbon tokens. By doing so, we aim to establish a stablecoin that is independent of centralized control and generates demand for crypto assets backed by ecological real-world assets.

Facilitating the Aave Gho Ecosystem:

To tackle these challenges, we have built a facilitator for the Aave Gho ecosystem. This facilitator has undergone the necessary approval from Aave Governance and is responsible for bootstrapping Gho liquidity and the Gho market. Through the facilitator, Gho tokens can be trustlessly generated and burned. Each facilitator is assigned a bucket with a specified capacity to ensure efficient operations within the ecosystem.

Cross-Chain Functionality and User Experience:

Our project utilizes Cosmos to enable the use of ecological assets across different chains. Users can provide collateral in the form of ecological assets cross-chain via Cosmos to mint Gho stablecoins. This allows users to leverage their ecological assets as collateral and lend them to others via Aave, earning interest on their assets.

Challenges Faced and Solutions:

Throughout the development process, we encountered several challenges and devised solutions to overcome them. Reworking a lending protocol from collateral and supply orientation to collateral and synthetic proved to be a non-trivial task. We had to update the model and incentive mechanism significantly. Additionally, coordinating liquidations across different chains required careful coordination and precise calculations.

We faced some obstacles on the user interface (UI) front, with a shortage of UI developers and challenges integrating wallet widgets. We had to fork the nearest social gateway and spend time hacking the design to integrate the wallet widget seamlessly.

Conclusion:

Winning the Aave Challenge at the EthPrague Hackathon has validated our vision of creating a sustainable future through ReFi lending and ecological asset investments. The project offers a unique solution to address climate change while revolutionizing the stability and backing of stablecoins. By leveraging cross-chain functionality and facilitating user experiences, we are paving the way for a more inclusive and environmentally conscious financial ecosystem.

We extend our gratitude to the entire team for their hard work and dedication in bringing this project to fruition. Together, we can forge a path toward a livable and sustainable world for future generations.