Bowerbird

Bowerbird is a DeFi lending protocol that collateralizes bNEO - a divisible version of NEO that votes and receives GAS rewards, and lends out USDL - a USD-pegged algorithmic stablecoin recently deployed by Lyrebird.

Bowerbird was most heavily inspired by Compound and Anchor. The past couple of years have shown that a good DeFi stablecoin lending protocol with high yields can drastically increase the TVL of a L1 blockchain. Bowerbird hopes to achieve this for Neo N3.

Lenders can deposit USDL to Bowerbird and receive a corresponding quantity of Bowered USDL (bUSDL), which can be thought of as a deposit slip for the deposited USDL. They can later convert the bUSDL back into USDL at a more favorable exchange rate due to the interest repayments made within the interval.

Borrowers can then deposit their bNEO as collateral and borrow USDL against it. The loan position accrues interest every block, so the borrower must be aware of their loan health and either make timely repayments or increase the collateral to ensure that their collateral does not get liquidated. The solvency of the platform is secured by the minimum loan-to-value ratio (initially set to 75%) and a liquidating mechanism similar to Compound. If a loan position is under-collateralized, a liquidator can purchase up to 50% of the underlying collateral with a 5% bonus by submitting USDL to repay part of the under-collateralized loan.

The key feature of Bowerbird is that it will periodically claim GAS rewards from the collateralized bNEO in order to boost lender yields. It will then swap the GAS for USDL on Flamingo and add this to the yields earned by depositors. We estimate that Bowerbird can yield 10.8-12%+ yields on USDL deposits based on current bNEO APR, 80% utilization rate, and 150% collateralization ratio, not even taking into account the actual loan APR.

In a similar vein, Bowerbird will also collaborate with Flamingo to bring Flamingo LP tokens as collateral assets. Once implemented, borrowers will be able to borrow against their LP positions, unlocking access to $50M+ in collateral.

Bowerbird will be an open source protocol governed by the Bowerbird Token (BWB). BWB will be distributed to early lenders and borrowers and will hold governance rights over the protocol, including minimum loan-to-value ratios, interest rates, and future BWB emission rates. Bowerbird will also have the ability to set aside a portion of yields earned and purchase BWB on the open market to burn.