In TradFi, collateral has long been treated as static due to considerable overhead in it's management. In order to free up collateral, you need to repay the associated debt.
A major innovation of DeFi is unique permissionless composability. One constant theme is strong rehypothecation of assets for increased capital efficiency. Despite this, the innovation around collateral management has been lacking and protocols still rely on static collateral.
We've seen attempts at making collateral yield-bearing or rehypothecating yield-bearing positions such as LSTs and LRTs. Nonetheless, collateral has remained static – users deposit into a specific vault without much flexibility afterwards, reducing a user’s flexibility.
Moreover, today's DeFi landscape has users navigating a maze of protocols, each with its vaults, strategies and configurations. These silos create complexity: different rules for reward tokens, compounding strategies and cross-protocol optimizations.
All of this results in reduced capital efficiency, a lack of flexibility and various UX challenges in a hard-to-navigate environment for end-users.
Jigsaw introduces the concept of dynamic collateral as the missing piece of DeFi for unlocking unparalleled flexibility and capital efficiency.
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Chainlink Labs is the leading provider of secure and reliable open-source blockchain oracle solutions, enhancing smart contracts by connecting them to a wide range of off-chain data sources and computations, such as asset prices, web APIs, IoT devices, payment systems, and more. We are dedicated to the development and integration of Chainlink as the standard decentralized oracle framework used by smart contracts across any blockchain.
