Why Stormbit
The Problem with Traditional DeFi Lending
DeFi lending protocols like Aave and Compound revolutionized permissionless credit markets. But their design creates fundamental problems:
Liquidation Cascades
Traditional protocols monitor collateral values continuously. When prices drop, positions get liquidated in waves:
Price drops 10% → First liquidation wave
Liquidations add sell pressure → Price drops further
More liquidations trigger → Cascade accelerates
Market stabilizes after massive losses
This happened during the March 2020 crash, the May 2021 correction, and countless other events. Borrowers who could have held through volatility lost their collateral to liquidation bots.
Unpredictable Costs
Variable interest rates seem attractive when utilization is low. But when you need stability most:
High demand spikes rates unexpectedly
Market stress increases borrowing costs
Profitable strategies become underwater overnight
MEV Extraction
Liquidation bots front-run each other, extracting value from distressed positions:
Borrowers receive less for their collateral
Liquidators extract maximum value
Protocol users subsidize MEV profits
One-Size-Fits-All Risk
Pool-based protocols price all loans identically:
Volatile assets get same rates as stable collateral
Short-term loans priced like long-term exposure
Risk gets socialized across all depositors
Our Approach
Stormbit uses risk-priced, term-based lending. Every loan is priced against the Underwriting Surface (LTV × Duration × Volatility), which determines the upfront premium borrowers pay.
See Risk Pricing for how premiums are calculated.
How Stormbit Solves This
Check LTV once, not continuously
Traditional: Monitor LTV continuously → Liquidate on breach
Stormbit: Check LTV at origination → Lock risk window → Settle at maturity
Price risk upfront via premiums
Borrowers pay fixed upfront cost for pre-priced term
Lenders earn volatility premiums that normally go to MEV bots
No variable rate surprises
Modular architecture for any use case
Hooks enable P2P lending, automated pools, KYC gates, yield optimization
Modules support ERC20, NFTs, and identity-based collateral
No forking required to launch new markets
See Key Features for detailed explanations.
Positioning
Model
Spot market for lending
Futures/options market for credit
Settlement
Real-time
Forward-dated (maturity)
Pricing
Variable rates
Fixed upfront premiums
Best for
Active traders, short-term
Strategic positions, institutions
Bottom line: Aave gives you today's rate. Stormbit gives you a rate locked at origination for the next 90 days, regardless of market crashes.
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