Haechi SOOHO Dedaub
Haechi SOOHO Dedaub
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Last updated: Aug 14, 2023
Belt Finance is an AMM protocol. Launched in March 2021, it currently supports the BNB Smart Chain, HECO Chain, and Klaytn networks. In addition to AMM, the platform provides users with the ability to earn income across multiple networks by adding their assets to pools and vaults with multi-strategy yield optimization through compounding and lending.
There are currently two pools on the Belt Finance platform: 3Thether and 4Belt. The 3Thether liquidity pool is cross-chain in nature and consists of three stablecoins from three different networks — USDT on BSC, USDT on HECO, and USDT on Klayth. This pool allows AMM users to move their assets across chains with low impermanent loss and slippage. The platform deploys Orbit Bridge for cross-chain transfers. Belt Finance has also implemented a function which allows for connection to the existing liquidity-based DEXes (PancakeSwap, MDEX, KLAYswap) to make it possible for users to essentially swap any token to any other token on any of the connected chains. For example, if a user wants to swap USDT (BSC) into ETH (HECO), it will happen like this: USDT(BSC) → 3Tether BLP → BLP ETH(HECO).
The second liquidity pool 4Belt works on BSC and HECO networks. It contains beltTokens (BSC: beltBUSD, beltUSDC, beltDAI, beltUSDT; HECO Chain: beltHUSD, beltUSDC, beltDAI, beltUSDT). This architecture helps to increase APR and obtain high returns by implementing multiple strategies for one pool. Users have the option to contribute one or more stablecoins to the pool, the yield does not depend on it. The ratio of tokens in the pool is not constant, but the pool is designed to motivate depositors to balance this ratio by depositing missing tokens in exchange for more 4Belt BLP tokens received. This is called Deposit Bonuses. This bonus also applies to withdrawals, but in reverse order.
The platform also features a product called Vaults. Vaults are capital pools that automatically generate yield based on opportunities available on the market. There are multiple benefits of using Vaults, such as spreading gas costs, automating the yield generation and rebalancing processes, and automatically shifting capital as opportunities arise.
Belt Finance can be accessed via connecting wallets like MetaMask, Klip, Kaikas, or Binance Chain Wallet to the Belt Finance app. On the main page of the application there is a dashboard showing the current TVL of the platform (displayed separately for each network), as well as all available pools and vaults with their current APR/APY. On the right side there are current strategies, with an indication of the amount earned. On the same page, you can see your current portfolio.
The user can choose one or two pools to provide liquidity. By contributing assets to the 3Tether pool, the user receives a 3Tether LPB token in return, confirming their right to a portion of the pool's tokens. Rewards will accrue accordingly in Tether tokens.
When contributing assets to the 4Belt pool, the user receives a 4Belt LPB token in return, which entitles them to a portion of the pool tokens. As users receive rewards for their deposits in the 4Belt Pool, the number of user tokens will not increase, but the value of each 4Belt BLP token will go up, together with the 4Belt APR and trading fee APR. Also, while the assets are held in the pool, Belt tokens are credited in real time and can be harvested any time.
The 4Belt token represents the average of the underlying stablecoins (USDT, BUSD, USDC, DAI) plus the yield from the multi-strategy yield and trading fees.
As more yield gets applied with more time and with more strategy protocols giving higher yield, the value of the 4Belt token will continually increase. The yield is autocompounded every six hours.
Providing liquidity to vaults, the user receives beltTokens in return. They represent liquidity provided in a Belt depositor contract. beltTokens are compounding vault tokens. For example, if a user deposits BTCB in Belt BTC Vault (Belt Depositor contract) they will receive beltBTC in return. When a vault generates income, the value of the user's beltTokens increases. The base APR from the multi-strategy yield is automatically added and compounded every six hours to the value of the beltToken. The user is also rewarded with BELT tokens.
There are no fees on Belt Finance. This means that the protocol does not charge for depositing assets into the vaults or for withdrawing them. However, commissions are charged by the protocols that are used in implementing strategies. These fees are indicated at the time of depositing/withdrawing funds from the vaults. Currently, deposit fees range from 0% to 0.11% and withdrawal fees from 0% to 0.06%.
The platform also offers an option to put a native BELT token into Belt Finance staking with a lockup period of seven days. The deposited tokens will be automatically compounded.
The Belt Finance native BELT tokens were distributed by the IFO on PancakeSwap in March 2021. At that time, 150,000 tokens were distributed. 22,500 tokens were used for promotion and another 27,499 BELT will be distributed to marketing campaigns.
The token issuance equals 33,926 tokens per day. The BELT token has a halving mechanism built into it, which means a maximum token issue of 22,108,836 BELT (actually even less because of the combustion mechanism). All token inflation is distributed among pools and LP stakers.
BELT is a governance token. Token holders have the ability to vote on decisions such as adding new strategy protocols or token burn rate.
Belt Finance was created by Ozys, a leading blockchain tech company, which also created cutting-edge services such as KLAYswap and Orbit Chain.
There was a Belt Finance hack in May 2021 that resulted in a loss worth around $6.3 million. The attack was made through a flash loan transaction and used a vulnerability in the Belt Finance integration with the Venus strategy.
Days following the Belt Finance exploit, the company announced they will be compensating users that were directly affected, and there will be a BELT buyback fund established to increase the BELT token value and make liquidity mining of BELT more profitable.
Another partner of Belt Finance is Value DeFi — it provides additional vBSWAP rewards for Belt.fi vaults on vSafe.
The main challenge Belt Finance is facing in the near future is implementing support for more blockchains and ensuring their interoperability. Equally important to the team is the creation of new vault strategies and delegating key decisions regarding the platform to the BELT token community.