Vendor Finance Partners with Entangle and FusionX

Vendor Finance
5 min readSep 8, 2023

We at Vendor Finance are thrilled to announce our partnership with both the Entangle protocol and FusionX dex! This partnership marks a significant milestone as Vendor Finance launches on the Mantle testnet. Through this collaboration, users of Entangle’s Liquid Vaults will gain access to Vendor lending pools, enabling them to optimize their capital efficiency by utilizing the Entangle Vault tokens as collateral within the Vendor protocol. By doing so, users can maintain their exposure to the underlying value represented by the Entangle Liquid Vault token, which is a Liquid Staking Derivative (LSD), while simultaneously farming rewards from other sources with the Vendor loan, thereby maximizing profits. Upon the repayment of the loan, the user will unlock their collateral, which in this case would be the Entangle Liquid Vault token(s). It is important to remember that the LSDs in this case are derived from the LP tokens a user receives from providing liquidity in the FusionX DAI/mUSDC liquidity pool.

Let’s dive into how it all works:

What is FusionX?

FusionX stands as a decentralized AMM, revolutionizing token swaps with affordability and efficiency. Moreover, it allows liquidity providers to earn trading fees by providing tokens into the novel FusionX token pools. As LP tokens derive their worth from the assets within the pool and the potential to accrue trading fees, Entangle’s Liquid Vaults offer an ideal avenue to leverage the full potential of these LP tokens by giving them additional utility.

What is the Entangle Protocol?

The Entangle protocol is an innovative DeFi protocol aiming to create a seamless, interconnected environment for various blockchain networks where users can maximize capital efficiency through Entangle’s novel liquid staking derivatives (LSDs). It achieves this by building an interoperable cross chain layer whose primary application within this ecosystem are Liquid Vaults. These Liquid Vaults are derivatives where the underlying value is derived from an LP token obtained by providing liquidity to a liquidity pool. What makes Entangle’s Liquid Vaults so powerful is the capability to transfer the vault tokens cross chain with the idea being to utilize the vault tokens in places that will generate the most profits.

Example A:

  1. Bob provides liquidity into the DAI/mUSDC V2 pool on the FusionX DEX on Mantle Testnet. Bob is minted LP tokens to represent his share in the generated pool fees.
  2. Bob stakes his freshly minted LP tokens into the appropriate Entangle Liquid Vault. Bob is minted Vault tokens at a 1:1 ratio with the amount of LP tokens he deposits into the vault.
  3. Bob can now utilize these vault tokens however he sees fit, be it transferring the vault tokens to a different blockchain network if there is a clear profit opportunity, or keeping them on the same network. Whatever he decides to do, he will remember that the value of his vault tokens are derived from the LP tokens he staked within the vault.

What is Vendor Finance?

Vendor Finance has been dedicated to providing the DeFi community with an innovative approach to lending — delivering peer to peer, fixed-term, fixed-rate, non-liquidation loans without an oracle dependency. These loans are facilitated through isolated lending pools, where the terms are established by lenders, and the funds become accessible to borrowers. When a borrower takes out a loan, they must pay the lender’s specified interest rate, and make sure they repay their loan by the repayment due date if they would like to unlock their collateral. If the borrower fails to repay their loan by the stipulated due date, they retain their loan while forfeiting their collateral to the lender. This situation is commonly known as a default. The only scenario in which a borrower might intentionally default on their loan is when the loan’s value exceeds the collateral’s value at the due date.

How can Vendor Finance enhance Entangle’s Vault token utility?

Having gained insight into FusionX, Entangle and Vendor, it is important to outline the utility of vault tokens within the Vendor protocol.

The key enhancement lies in the fact that Vendor Finance will enable users to utilize their Vault tokens as collateral within these lending pools. Consequently, vault token holders can secure loans against their Entangle Vault tokens, thereby maximizing their profit potential through strategic deployment of these loans into other profit opportunities.

Example B:

  1. Bob provides liquidity into the DAI/mUSDC V2 pool on the FusionX DEX on Mantle Testnet. Bob is minted LP tokens to represent his share in the generated pool fees.
  2. Bob stakes his freshly minted LP tokens into the appropriate Entangle Liquid Vault. Bob is minted Vault tokens at a 1:1 ratio with the amount of LP tokens he deposits into the vault.
  3. Bob finds a Vendor lending pool that accepts the vault token as collateral in exchange for DAI. The lending pool has a “lend ratio” of 100, meaning that for every 1 vault token (the unit of collateral) he deposits, he will receive 100 DAI. Bob deposits 5 vault tokens and receives 500 DAI minus lender interest rate.
  4. The reason Bob wants the loan in the first place, is that he sees an opportunity to farm more profits with his loan rather than if he just holds and does nothing with the vault tokens. He makes sure, however, that he can generate more profits with the borrowed DAI than the interest rate he must pay the lender to take out the loan.
  5. Bob wishes to unlock his collateral, so he repays his DAI and his vault tokens are sent back to him.

One avenue where Bob can boost his vault token profits is by obtaining more LP tokens from the original FusionX pool where he provided liquidity. After step 3 of the aforementioned example, Bob could swap half his DAI loan for mUSDC, provide more liquidity in the FusionX pool, stake the freshly received LP token via Entangle, and rinse and repeat, thereby leveraging his original position. This strategy effectively amplifies the fees earned from the underlying LP tokens, which are received in return for providing liquidity to the FusionX pool.

Key Takeaways

  • FusionX AMM enables liquidity providers to earn trading fees when providing liquidity into a token pool
  • Entangle offers Liquid Staking Derivatives (LSDs) through their novel Liquid Vault tokens that can be transferred cross chain
  • Vendor will be launching on mantle testnet & will whitelist Entangle vault tokens (LSDs) to be used as both a collateral and lend asset

If there are any questions about anything, please feel free to reach out on discord. We would be happy to help!

Links:

Vendor Finance: https://vendor.finance/borrow

Vendor Docs: https://docs.vendor.finance/overview/what-is-vendor-finance

Vendor Discord: https://discord.gg/HDV8TZpd

Vendor Twitter: https://twitter.com/VendorFi

Entangle Protocol: https://www.entangle.fi/

Entangle Docs: https://entangle-protocol.gitbook.io/entangle-protocol/overview/introduction

Entangle Discord: https://discord.gg/entanglefi

Entangle Twitter: https://twitter.com/Entanglefi

FusionX: https://fusionx.finance/

FusionX Docs: https://docs.fusionx.finance/

FusionX Discord: https://discord.gg/yBq9EhN2

FusionX Twitter: https://twitter.com/fusionx_finance

--

--