Proposal: Optimizing Interest Rates on Arbitrum, Ethereum, and Lumia Chains for Enhanced Competitiveness

General
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Hello Paribians,

As Paribus continues to evolve as a top cross-chain borrowing and lending protocol, I’d like to propose a discussion on optimizing our interest rates across Arbitrum, Ethereum, and Lumia chains. With DeFi competition heating up, tweaking our rates could make Paribus more attractive to both lenders and borrowers, driving liquidity and TVL growth. Here’s my idea for consideration:

                                    **The Idea:**

Each chain we support—Arbitrum, Ethereum, and Lumia—has unique strengths and user bases. I think we can adjust our rates strategically to capitalize on these:

  1. Arbitrum: Boost lender rates for stablecoins (e.g., USDT, USDC) and key assets like wBTC. With Arbitrum’s low fees already a draw, higher yields could pull in more liquidity providers looking for solid returns without gas costs eating into profits.

  2. Ethereum: Offer reduced borrower rates tailored to collateral types (e.g., NFTs, ETH, ERC-20s). Lower costs for high-value or unique assets could encourage borrowing, especially among NFT holders wanting to unlock liquidity without selling, tapping into Ethereum’s massive DeFi and NFT community.

  3. Lumia: Launch with a promotional rate structure—higher for lenders, lower for borrowers—for a limited time after full integration. This could jumpstart adoption on Lumia’s emerging ecosystem, positioning Paribus as a go-to platform early on.

                                  **Why This Matters**

-Arbitrum: Enhanced lender returns could leverage its scalability and affordability, making us stand out against competitors like Aave or Compound.
-Ethereum: Tailored borrower incentives could attract the chain’s deep pool of asset holders, cementing Paribus as the best option for unlocking value in NFTs and beyond.
-Lumia: A temporary rate edge could build momentum and loyalty in a growing ecosystem, setting us up for long-term success.

                                 **Potential Impact**

  • More lenders = deeper liquidity pools.
    Borrower-friendly rates = increased loan activity, especially for exotic assets.

  • A stronger, more competitive Paribus that draws users across all three chains.

                 **Questions for the Team & Community**
  1. What are your thoughts on these rate adjustments? Do they feel compelling enough to compete?
  2. Would dynamic rates (adjusting based on utilization or market conditions) work better than static tweaks?
  3. Any insights on current user trends across these chains that could shape this idea?
  4. How do we ensure the protocol stays profitable while offering these incentives?

I’d love feedback from the Paribus team—Wilson, Simon, Deniz, or anyone else—on whether this is doable. Are there technical or economic factors we need to tackle? Community input is just as crucial—let’s refine this together to make Paribus the most attractive option out there!

Looking forward to your ideas as well,
Nikola
Paribus Ambassador.

2 Likes
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I would like to see this worked on. As it is, the idea would provide a much needed boost to the protocol. Increasing TVL, user base and general awareness. I’d also be interested to know the team’s take on this :slight_smile:

I guess in an ideal world dynamic rates would be great, but they might be tricky to keep competitive. Perhaps dynamic rates within a manually set range, to stop it going haywire. Then the range could be tweaked if needed. Thanks Nikola :folded_hands:

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Great insights! I completely agree—this could be a game-changer for boosting TVL, user adoption, and visibility. Dynamic rates within a controlled range sound like a solid approach to balance flexibility and competitiveness. Would love to hear the team’s perspective on this as well. Appreciate your thoughts! :raising_hands::rocket:

2 Likes