Analysis of Lybra Finance v2: Expanding eUSD use cases, attracting TVL, and optimizing tokenomics.

Original title: "Analysis of Lybra Finance v2: Creating eUSD use cases, attracting TVL, and optimizing Tokenomics"

$LBR has been rising all the time. I sold it at around 0.1x. It has been almost a month now, and $LBR has increased tenfold since I sold it. When writing these words, it was around 1.8u. I believe that such a significant increase is due to the team's efforts in token price and product development.

Regarding Token price, the team did not use a high emission model, but instead focused on long-term development, resulting in a continuous increase in protocol TVL. In terms of product, the team did not rest on their laurels due to their achievements, and will soon launch the v2 testnet in mid-June (after audits and bug bounties by Immunefi and code4rena).

Therefore, today I would like to share my personal insights on Lybra Finance v2.

There are several exciting features in v2:

1. Expand the entire chain through LayerZero.

2. Add more types of LST assets;

3, LBR's new Tokenomics;

4. Protocol revenue/fee capture reform;

5、DAO governance;

Firstly, full chain expansion. The first cross-chain target is Arbitrum. As far as I know, the team has started to discuss cooperation with protocols on Arbitrum. I speculate that Layer2 is the preferred cross-chain option, and in the future, eUSD may be cross-chained to other alt-layer1s. The protocol will create a weUSD for cross-chain purposes. In fact, outside of cross-chain, the weUSD scenario will be more extensive, such as participating in other DeFi protocols and so on.

Secondly, add more types of LST assets as collateral. The difficulty of this lies in the fact that stETH is automatically compounded, so eUSD is also automatically compounded. If other LST assets are introduced, how should the automatic compounding of eUSD be realized? My guess is that if we return to unity, the automatic compounding function of eUSD will be cancelled - only by pledging eUSD can users obtain ETH collateral APY. After pledging, users can obtain the weUSD version, which can be used for cross-chain or participation in other DeFi protocols. If users want to exit, they need to convert weUSD back to eUSD to obtain principal + profit.

Third and fourth points, Lybra introduces investors, with at least 1 year lock-up period for VCs, who will help Lybra develop the market and ecosystem.

Additionally, there is the introduction of deflationary elements for $LBR and an increase in the lock-up period for esLBR (increased to 60 days), as well as the allowance for longer lock-up periods.

In order to ensure the token price, Protocol V2 has also created some scenarios for $LBR, such as introducing the Dynamic Liquidity Provision (DLP) mechanism. To mine $LBR from the eUSD pool, a minimum total value of 5% of DLP tokens must be provided as collateral. Token deflation will be reflected in this scenario: if the 5% DLP requirement is not met, other users can purchase these esLBR rewards with a 50% discount using $LBR. After receiving $LBR, 10% of it will be burned and 90% will be sent back to the reward pool.

The fifth point is DAO governance. After introducing esLBR into DAO governance, Lybra will allow the community to participate in the decision-making power of the protocol.

It is worth noting that Lybra is considering how to ensure sufficient liquidity and a more stable peg for eUSD in the future. Its main idea is to introduce eUSD into Curve. However, this needs to be done step by step, and the protocol needs to accumulate $CRV.

Overall, I am quite satisfied with the concept of Lybra v2. It is dedicated to addressing the issues encountered in the development of its own protocol (TVL and Tokenomics) and the lack of application scenarios for eUSD.

Next, how to create sufficient liquidity and rich circulation scenarios for eUSD will be a crucial part of the protocol's development.

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