October 27, 2021
In this post, I’ll provide a step-by-step guide on how to use LUSD on Rari Capital.
Quick Disclaimer: This tutorial is not a recommendation and interacting with DeFi protocols can be risky. Please do your own research and use your best judgement.
Rari Capital is a combination of decentralized finance products consisting of creating and delivering yield. These products are governed by the DAO through their native token, RGT. So far, four products have been introduced to the Rari ecosystem: Fuse, Yield Aggregator, Tranches, and Pool 2. In this tutorial, I’ll be covering Fuse.
Fuse is similar to Aave and Compound in that it centers around lending and borrowing pools where users can supply assets to earn interest as other users borrow those assets.
In Aave and Compound, all assets are combined into one money market and managed through governance — Fuse takes a different approach by introducing permissionless pools. This allows anyone to create their own isolated money markets. As a result of being isolated, the pool creator can select any assets, oracle, interest rate model, etc.
Just recently, a Liquity Fuse Pool went live containing LUSD, FEI, FRAX, DAI, and USDC. At the time of writing, users can supply and borrow against these assets with a maximum loan-to-value (LTV) ratio of 75%. Since Fuse Pools are highly customizable, the Liquity community will be able to discuss and vote on future changes such as adding new assets and changing pool parameters through the Rari Capital DAO.
Now that you’re familiar with Rari Capital and Fuse pools, let’s dive into the tutorial 👇
Unlike providing liquidity which in most cases requires users to supply multiple assets in pairs, you’ll only need one of the assets that the pool contains to participate. For this tutorial, we’ll focus on utilizing LUSD.
To obtain LUSD, you can borrow LUSD against ETH as collateral (guide on this here) or you can buy LUSD on decentralized exchanges.
Note: If you wish to keep your current ETH exposure, using Liquity to open a Trove may be the optimal choice.
Here, you’ll be able to find Rari’s documentation, governance forums, community resources, and more. Feel free to look around, but click “Get Started” and then “Rari Capital” to land on the main dashboard.
Once you’re on the main dashboard, you’ll have access to all of Rari Capital’s products and some neat statistics. To access the Fuse UI, click “Fuse” in the top-tab.
This is where you can visualize the power of permissionless pools! As of now, there’s over 30 verified Fuse pools with their own unique assets and parameters. Although most of the stats displayed are self-explanatory, I do recommend reading their documentation on how Rari Capital comes up with the Risk Score.
Note: The Risk Score on the Liquity Fuse Pool is currently graded at an F, this is mostly due to the supplied amount and utilization % being low.
Before you access the Liquity Fuse Pool and supply assets, I want to cover where you can find a more in-depth overview of each pool. To find this info, you’ll need to click on any pool and then navigate to “Pool #x Info” as displayed below. For this example, I’ll be using Olympus Pool Party since the Liquity Fuse Pool currently has no lenders and borrowers (hopefully this tutorial changes that!).
Once you’re on the info tab, you can find various stats such as total supplied, total borrowed, and available liquidity. While those are straightforward, I’ll cover the ones that may be more ambiguous:
Now that you can break down each pool and the underlying parameters, we’ll need to find the Liquity Fuse Pool and supply some assets. To do this, you can either scroll down or click here.
The next steps should be effortless:
A few things to keep in mind:
And that’s it! This tutorial should cover everything you need to know to get started with the Liquity Fuse Pool. To learn more, here’s some of Rari Capital’s resources: