In the Decentralized Finance (DeFi) world, different protocols have been developed to provide users with the ability to generate returns (yield) while maintaining, increasing, or shifting their exposure to certain digital assets. The problem is that these protocols are all built on different blockchains or across different layers of the same network to leverage the best technology for their specific use case. As our awareness of these issues has grown, we have been exploring several projects that are being designed to relieve the end-users of the silo burden. One of these projects is Instrumental Finance, a DeFi protocol seeking to alleviate the blatant problems faced by liquidity providers (LPs) as they farm yield across different networks.
As we mentioned previously, a silo-effect enables projects to leverage the right technology for best results but is accompanied by restrictions in the free movement of the digital assets or digital investment positions. The restrictions naturally fall upon the end-users who want to move their positions across different protocols, networks, chains, or layers to farm the highest possible yield. As an example, if a higher yield opportunity presents itself but requires the user to move their position to a different chain or layer, then this higher yield opportunity may not actually be a “higher-yield” opportunity when taking into account the fees, time, and complexity of moving the position.
Instrumental Finance recognized the problem with these opportunities and set out to free up the LP positions to allow users to maximize their yield across different layers and chains. The project currently utilizes Composable’s Mosaic bridge to be integrated into an already well-established ecosystem instantly. Still, the project is constantly developing and exploring additional bridges and paths to further free LP positions for yield maximization.
The Instrumental team has been releasing informative content and progress updates over the past month. Most recently, they have announced their Liquidity Bootstrapping Pool event to release their native STRM token. The LBP event is taking place on December 6th, 2021, on Copperlaunch. This news and the news of their airdrop were quickly picked up by several media outlets such as Yahoo Finance and Marketwatch.
Instrumental Finance is supported by Composable Finance, having been incubated through their venture building arm, Composable Labs. These two teams work closely together and have outlined their mutually beneficial efforts across their social media pages. The overarching community of the Composable ecosystem seems to be actively participating and sharing the enthusiasm for the potential of Instrumental’s technology.
Many projects are attempting to solve the problems that blockchain solutions face in the currently siloed environment. Although they are not alone in their efforts, it appears that Instrumental understands the problematic state while presenting a promising solution focused on creating a seamless experience for end-users.