Sumer.Money: In the context of multi-chain, is the liquidity battle bringing opportunities or challenges to financial infrastructure innovation?

No matter if you are an experienced DeFi enthusiast or a "Degen" looking to optimize returns in a constantly changing market environment, what do you value in this decentralized capital market? Capital efficiency? Fund security? Or position flexibility?

Assuming that DeFi protocols have undergone very strict audits and have real-time proactive attack protection and monitoring, guaranteeing fund security, have you ever thought about having a lending market with ultra-high capital efficiency and flexibility that allows you to manage your positions with maximum flexibility according to the current highest yield leverage opportunities, such as LSTs, LRTs, and yield stablecoins?

The lending market is often considered a relatively dull part of DeFi—long-term holdings that require almost no monitoring. This is precisely why certain leading protocols dominate DeFi market liquidity; the first-mover advantage has built not only a high wall of user experience based on liquidity but also shaped user habits.

Nevertheless, existing lending market protocols still fall short in meeting the needs of users seeking extreme flexibility. Sumer Money has recognized this and aims to create a choice for DeFi users that balances capital efficiency, security, and flexibility.

Before we delve into the specific implementation methods, let's first understand how the design of liquidity pools affects capital efficiency in the current multi-chain DeFi environment.

The Design of Liquidity Pools in DeFi Protocols is the Core of Capital Efficiency

DeFi protocols rely on liquidity pools to operate—but for the same asset, more independent pools often mean fragmented liquidity, resulting in lower capital utilization and a poorer user experience for trading and providing liquidity.

DEX protocols like Uniswap v4 and Balancer v2 have both introduced innovative designs of shared liquidity pools in the DEX space to reduce liquidity fragmentation. However, similar innovations have not yet been applied to the design of lending pools.

In contrast to shared liquidity pools, independent liquidity pools have significant advantages in reducing the risks of long-tail assets. However, for mainstream assets like ETH, BTC, and USD, independent liquidity pools often lead to unnecessary liquidity fragmentation without correspondingly reducing risk. These mainstream assets are precisely the main assets in the lending market.

Capital Efficiency in Multi-Chain DeFi: Combinations and Management of Cross-Chain Assets

Typical DeFi users face a steep learning curve as they navigate between different chains, searching for suitable tokens, bridging tools, and yield opportunities. Often, these yield opportunities come at the cost of asset security, as they require interaction with bridging tools and DeFi protocols across multiple chains, not to mention the opportunity cost of yield loss on the original chain during cross-chain transactions.

Sumer Money's Design

1. Shared Liquidity Pools to Enhance Capital Efficiency

Sumer introduces a brand-new risk control engine that automatically considers the correlations between assets when assessing risk. Traditional lending protocols typically start from the asset side, statically determining a user's borrowing capacity based on the current value of their collateral. In contrast, Sumer intelligently matches users' collateral assets and borrowing assets based on asset correlations, automatically matching higher borrowing limits for highly correlated collateral-lending combinations, thereby maximizing users' borrowing capacity without increasing risk. For example, if there are correlated assets in a user's position (such as depositing wstETH and borrowing ETH), Sumer will automatically adapt a higher LTV (Loan-to-Value ratio), maximizing capital efficiency and asset utilization.

To achieve the same optimized LTV, many lending protocols need to set up separate liquidity pools for different asset collateral-lending combinations, which leads to liquidity fragmentation and presents more complex choices for saving and borrowing users. Sumer's design merges the liquidity pools of correlated and non-correlated assets into a shared liquidity pool, significantly enhancing users' capital efficiency and flexibility.

Additionally, Sumer can freely combine assets based on their correlations and liquidity, flexibly adjusting these combinations as asset liquidity changes.

Here are examples of Aave E-mode, independent lending protocols, and Sumer in lending:

2. Flexibility in User Position Management

The following illustrates how Aave e-mode, independent lending protocols, and Sumer manage positions in four typical DeFi scenarios:

It is evident that Sumer's capital-efficient unified liquidity pool offers considerable flexibility in position management compared to existing lending protocols.

3. Sumer Money's Money Multiplier

In traditional finance, there is the concept of a money multiplier, where banks can issue loans to users in need of funds based on the assets deposited by savers, thereby increasing the market's money supply, resulting in money multipliers like M2 and M3. Sumer draws inspiration from this; users can now create synthetic suUSD, suETH, and suBTC by using their deposits in Sumer as collateral. These su tokens function like a Visa debit card issued by the bank, allowing users to keep their funds in Sumer's application on the original chain while retaining all DeFi yields (staking, re-staking, lending) on that chain. The su tokens can be used in other chains and new ecosystems, achieving a seamless experience in cross-chain DeFi, allowing users to participate in new ecosystems without worrying about the opportunity cost of funds on the original chain.

Sumer's shared liquidity pool supports cross-chain DeFi su tokens with an LTV of up to 98.5% based on correlated assets, with no additional costs. These su tokens can transmit settlement information across supported networks through partners like Chainlink CCIP and LayerZero.

Through its unique smart risk control engine, Sumer consolidates scenarios that previously required multiple different protocols (high correlation asset lending, low correlation lending, collateralizing stablecoins/synthetic assets, cross-chain bridge liquidity protocols) and multiple independent liquidity pools into one protocol and liquidity pool, allowing users to participate in staking and DeFi activities on new chains without losing the original chain's DeFi yields through the su tokens generated by Sumer's collateral.

Additionally, according to Sumer's AMA with zkLink Nova, Sumer mentioned that its su tokens have the potential to become composable modules in the cross-chain DeFi ecosystem. In the near future, su tokens will gain more application scenarios and yields through Sumer's own L1. The Sumer team will also contribute to the Cosmos community with a high-performance and decentralized solution compatible with the existing Cosmos SDK, better supporting EVM and parallel EVM consensus engines. This engine, called "Supernova Core," will focus on providing Web2-level user experiences in a highly decentralized network. Furthermore, Sumer tokens will serve as PoS tokens for the Sumer chain, capturing transaction fees and lending yields generated by DeFi and on-chain transactions.

Currently, Sumer has just launched its points system, with a total TVL of approximately $6 million across the chain. However, getting the envisioned capital efficiency flywheel to turn clearly requires deeper liquidity accumulation; otherwise, users will find it challenging to experience a complete DeFi closed loop on the product side, which is one of the biggest challenges Sumer faces. At the same time, the TGE date for Sumer has not yet been announced, and how to effectively leverage the expectations of the native token will be key to attracting more liquidity.