KEY TAKEAWAYS
- The Cyclo protocol launches on the Flare network, offering a liquidation-free leverage option in the DeFi space.
- Users can mint cysFLR tokens by locking sFLR, enabling trading strategies without traditional risks.
- Flare’s Time Series Oracle ensures reliable price feeds, enhancing security and trust in the Cyclo protocol.
- Future expansions may include assets like cyBTC and cyXRP, broadening the protocol’s impact.
The Cyclo protocol has been launched on the Flare network, introducing a novel approach to engaging with cryptocurrencies. This new protocol allows users to leverage their holdings without the risk of liquidation, marking a significant development in the decentralized finance (DeFi) space.
The first asset available through Cyclo is sFLR, or Liquid Staked FLR. Users can lock their sFLR to mint cysFLR tokens, which represent tokenized leverage on Flare. These tokens are issued at a 1:1 ratio, reflecting the dollar value of the locked assets. For example, locking $1,000 worth of sFLR results in receiving 1,000 cysFLR tokens.
How cysFLR Tokens Work
The cysFLR tokens can be traded on decentralized exchanges (DEXes) on Flare, such as SparkDEX. They can be paired with other assets like stablecoins, enabling various trading strategies. One potential strategy involves selling cysFLR for USDC, using the USDC for other opportunities, and then buying back cysFLR to unlock the original sFLR, retaining any excess as profit.
Notably, cysFLR is designed to trade within a price range of $0 to $1, depending on market demand for leverage. This design offers unique opportunities for speculation and trading, redefining leverage in the DeFi space by eliminating traditional barriers and risks associated with leveraged trading.
Advantages of Flare Network
The Cyclo protocol is positioned to thrive on Flare due to several key advantages. The Flare Time Series Oracle (FTSO) provides decentralized and accurate USD price feeds that back cysFLR mints. This ensures a consistent trust model between the underlying asset and its price feed, minimizing exploit risks.
Additionally, the FTSO’s design allows it to absorb short-term disruptions in minting while providing long-term reliability against potential bank runs caused by oracle failures. The FTSO is enshrined into Flare’s core architecture, supported by around 100 independent data providers, which maintains the integrity of the data.
Locking sFLR in the Cyclo protocol also allows holders to continue earning native FLR rewards via monthly FlareDrops, staking, and delegation. Participation in the Cyclo protocol is eligible to earn rFLR rewards on Flare.
Future Implications
The launch of Cyclo on Flare could extend to include other assets such as cyBTC and cyXRP. These assets would bring similar functions and economic properties to cysFLR, such as bounded cyclical price movements without liquidation risks.
By harnessing the power of Flare’s unique enshrined oracle system, Cyclo sets a new standard for DeFi applications. The protocol enhances functionality while providing a secure and efficient environment for users to engage in leveraged trading without traditional risks.
For more information, visit the official announcement here.
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