Introduction

Ratio Finance is a decentralized finance (DeFi) protocol operating on the Solana blockchain, designed to provide risk-adjusted, over-collateralized debt positions (CDPs). It enables users to mint its proprietary stablecoin, USDr, using yield-bearing collateral without forfeiting the underlying yield.

Tokenomics

Ratio Finance utilizes two primary tokens:

  • USDr: A stablecoin pegged to the US dollar, minted by users who deposit eligible collateral into Ratio's vaults.
  • RATIO: An SPL governance token that grants holders voting rights on protocol decisions and can be staked for rewards.

The protocol incentivizes long-term staking by offering higher rewards for extended lock-up periods, encouraging user participation and stability within the ecosystem.

Underlying Technology

Built on Solana, Ratio Finance leverages the blockchain's high throughput and low latency to offer efficient and cost-effective transactions. The protocol employs advanced risk assessment algorithms, known as Ratio Risk Ratings, to provide real-time quantitative and qualitative credit risk evaluations. This system guides users in making informed investment choices by assessing the risk associated with various liquidity provider (LP) tokens.

Network Integration

Ratio Finance operates exclusively on the Solana blockchain, taking advantage of its scalability and speed. In its initial phase, the protocol accepts stablecoin LP tokens from Saber as collateral for minting USDr. Future plans include expanding the range of acceptable collateral types, pending risk assessments through decentralized governance.

Market Status of Tokens

As of January 2025, USDr maintains its peg to the US dollar, serving as a stable medium of exchange within the Solana ecosystem. The RATIO token functions as a governance token, with its market value influenced by user adoption, staking participation, and overall protocol growth. Investors and users can stake RATIO tokens to earn rewards, with incentives structured to promote longer staking durations.

Investor Information

Ratio Finance has successfully completed multiple funding rounds, raising a total of $4.26 million. Notable investors include 11-11 DG Partners, AGE Crypto, ArkStream Capital, Assembly Partners, and AU21 Capital, among others.

Development Status

Since its establishment in 2020, Ratio Finance has achieved significant milestones:

  • Q2 2021: Company established and initial seed capital raised from investors including Alameda Research, CMS, and Solana Labs.
  • Q3 2021: Team expansion with high-level PhD graduates and former Big 4 employees.
  • Q4 2021: Deployment of the initial protocol iteration on testnet, allowing for user feedback and internal testing.
  • Q1/Q2 2022: Public launch of Ratio Finance following extensive audits, introducing the Ratio Risk Rating system to de-risk DeFi.

The protocol continues to develop, with plans to integrate additional collateral types and partner protocols to further its mission of de-risking DeFi.

Technological Innovation and Potential

Ratio Finance introduces several innovative features to the DeFi landscape:

  • Ratio Risk Ratings: Provides real-time risk assessments akin to traditional credit rating agencies, enhancing investment decision-making.
  • Self-Paying Loans: Allows users to deposit yield-bearing collateral and use the generated yield to repay their USDr loans, effectively creating self-amortizing debt positions.
  • Minimal Fees: Implements a fee structure with no stability fees, deposit fees, or interest rates, charging only a 0.5% loan origination fee and a small percentage of the acquired yield on deposited assets.

These features position Ratio Finance as a pioneering protocol aimed at mitigating risks and enhancing the efficiency of decentralized finance operations on the Solana network.

References