Skip to main content

The Problem: DeFi Limitations

info

This section of the documentation outlines features of the upcoming Glow Finance V1 application, currently in development. While we finalize this exciting update, you can already take advantage of Glow Restaking, which is live and available today.

Learn more about Glow Restaking.

The decentralized finance (DeFi) sector has transformed access to financial tools, yet significant inefficiencies remain. The early promise of true composability, capital efficiency, and user-friendly strategies has largely been unfulfilled. Traditional DeFi models, such as those used by Compound and Aave, rely on over-collateralized lending mechanisms that, while effective for risk management, impose severe limitations on users.

Challenges with Traditional DeFi Protocols​

  1. Over-Collateralization: Most lending platforms require users to lock up significantly more value than they borrow, reducing the capital efficiency that DeFi was meant to enhance.
  2. Static Capital: Assets locked into lending pools remain idle, limiting their potential for redeployment into more lucrative opportunities. Redeploying assets often requires users to exit positions entirely, increasing transaction fees and exposing them to unnecessary risks.
  3. Limited Strategy Options: Users cannot execute advanced strategies without manually interacting with multiple protocols. This creates unnecessary friction, complexity, and costs.
  4. High Liquidation Risks: The volatile nature of crypto prices leaves users vulnerable to liquidation when collateral values drop. This risk discourages risk-averse participants from utilizing DeFi products.
  5. Siloed Protocols: Despite the interoperability ethos of DeFi, protocols often operate in isolation, requiring users to juggle multiple platforms to execute even simple strategies.

How Glow Finance Overcomes These Challenges​

Glow Finance is purpose-built to break down these barriers and empower users with an unparalleled DeFi experience. By addressing these limitations, Glow enables users to:

  • Unlock Dynamic Liquidity: Take advantage of under-collateralized borrowing, a rare and powerful feature in DeFi, to maximize capital efficiency.
  • Eliminate Liquidation Concerns: Maintain flexibility while reducing the risk of liquidation with Glow’s innovative margin accounts and advanced risk management tools.
  • Optimize Capital Deployment: Leverage integrated features like margin accounts and restaking to diversify and amplify returns across strategies.
  • Stay Within the App: Execute advanced trading, borrowing, and yield-generating strategies, all without the need to interact with external platforms.
  • Seamless Ecosystem Integration: Glow integrates directly with DeFi protocols on Solana, making it easier to deploy capital efficiently across multiple opportunities.