Prisma Finance
Unlocking the Power of Liquid Restaking Tokens (LRTs)
Prisma Finance is a decentralized finance (DeFi) protocol designed to unlock the value of Ethereum staking by utilizing Liquid Restaking Tokens (LRTs) as collateral to mint its native stablecoin, ULTRA, pegged to USD. By collateralizing LRTs, users can generate ULTRA while simultaneously earning yield on their collateral.
https://prismafinance.com
How Prisma Works:
- Vaults with LRTs: Prisma allows users to open vaults collateralized with LRTs, such as weETH (ether.fi), rsETH (kelpDAO), ezETH (Renzo), and rswETH (Swell). More LRTs are continuously added, pending DAO approval:
https://gov.prismafinance.com/t/pip-030-add-curve-and-convex-receivers-for-ultra-usdc-pool/149
Vaults are similar to collateralized debt positions (CDPs), where users deposit LRTs as collateral in exchange for minting ULTRA. The collateral ratio starts at 180%, which users must maintain to avoid liquidation:
https://docs.prismafinance.com/protocol-concepts/depositing-collateral-and-minting-mkusd-ultra
- Minting ULTRA: When users deposit their LRTs, they can mint ULTRA, the native stablecoin. This ULTRA can be used across the Prisma ecosystem and beyond. The collateral’s value increases over time, thanks to the native yield from liquid staking, making it an attractive mechanism for long-term holding:
https://gov.prismafinance.com/t/pip-038-proposal-to-lp-ultra-from-the-fee-receiver-to-boost-ultra-liquidity/166
- Earning Yield: Prisma users can earn yield on their ULTRA tokens through its **Stability Pool** or other DeFi platforms like Curve and Convex [oai_citation:3,Depositing Collateral and Minting mkUSD/ULTRA:
https://docs.prismafinance.com/protocol-concepts/depositing-collateral-and-minting-mkusd-ultra.
This yield allows users to grow their holdings while benefiting from the appreciation of their underlying staked assets.
- Governance and Voting: Prisma Finance’s governance model allows users to earn PRISMA tokens by minting ULTRA, maintaining active vaults, or participating in the Stability Pool. These PRISMA tokens can be locked to influence governance decisions, emissions, and incentive structures.
Here are some of the benefits of using Prisma:
- Growing Collateral Value: Because of Ethereum’s transition to proof-of-stake, using LRTs in Prisma ensures that the collateral grows over time, making the loans more attractive.
- Flexible Borrowing: With no fixed repayment schedule, users can manage their collateral and loan ratios flexibly, adjusting their debt or collateral as needed.
Prisma Finance offers a unique opportunity for users to unlock liquidity on their staked Ether through LRTs, while simultaneously earning yield and contributing to decentralized governance.