Ethereum-based lending and borrowing platforms Iron Bank, Yearn Finance and Homora joined layer 2 network Optimism on Tuesday. The firms joined the protocol to improve cross-chain interoperability, security and capital efficiency for their users
Optimism users will now be able to borrow against their crypto assets, while benefiting from competitive gas fees, attractive rewards, and yield options. Decentralized finance (DeFi) refers to financial activities carried out on a blockchain without the use of third parties, while layer 2 is the system built on top of blockchains in order to process more data.
“By launching on Optimism, we aim to make DeFi more accessible, scalable and reliable as the protocol-to-protocol liquidity backbone,” explained Puff, lead contributor to the Iron Bank, in a statement to CoinDesk.
In recent months, Optimism has become one of the most used layer 2 platforms due to its speed and low user fees. Data shows that applications built on the network locked over $320 million worth of cryptocurrencies in January 2022, which has increased to over $1 billion as of Tuesday.
Ethereum fees become prohibitively expensive for users during times of high network demand, with network fees touching as much as $9,000 per transaction during one such period earlier this year. This is why building on networks like Optimism allows DeFi projects to be more accessible to users, explained Dark Ghosty, integrations lead of Yearn Finance.
“We're excited about Optimism for the users who were priced out of yVaults on Ethereum,” he said. “With the additional liquidity flexibility that Iron Bank provides as a protocol-to-protocol lending partner, people can get the best risk-adjusted yield in DeFi without having to worry about high gas costs on a super-fast chain.”
Iron Bank said it would initially start to offer rewards for users that supply weighted ether (wETH), USDC and DAI assets, with approximately 11,500 iron bank (IB) tokens allocated for rewards over the next four weeks
Additionally, Iron Bank has initiated a bug bounty and insurance campaign with ImmuneFI and Nexus Mutual. The campaign will focus on the prevention of potential exploits against user funds, assets, and data breach vulnerabilities.
The DeFi firm has also started offering a decentralized price oracle, a trusted third party that brings data from outside sources to a blockchain, with Chainlink.