What is Orbit Protocol

Overview

Orbit Protocol is a decentralized finance (DeFi) platform on the Stellar network, designed to provide users with stablecoins of all currencies through a secure and efficient Collateralized Debt Position (CDP) system. It allows users to overcollateralize their cryptocurrency—initially Stellar Lumens (XLM)—to borrow stablecoins, enhancing stability and liquidity in digital transactions.

Purpose

The primary aim of Orbit Protocol is to stabilize the digital currency ecosystem by offering stablecoins in exchange for cryptocurrency collateral. These stablecoins are useful mainly for the following two purposes:

Firstly, it enables people to perform international transactions very cheaply with a reliable, stable currency.

The second one is more ambitious: it could be used in developing countries with very volatile currencies to protect against changes in the value of the currency. The way this works is that someone could put up crypto as collateral to borrow a currency. When this currency drops in value, it can still be exchanged for the same amount of crypto.

How It Works

Orbit Protocol integrates with Blend’s lending pools, which facilitate the borrowing and lending of assets through smart contracts on Stellar Blockchain. Users can deposit XLM as collateral into a Blend lending pool to borrow stablecoins issued by the Orbit Treasury. These borrowed stablecoins can be used to trade on automated market maker(AMM) or or use in any yield baring dapp. Furthermore, the borrowed stablecoins can be exchanged for the collateral at any time although interests do apply.

Key Features

• Collateralized Borrowing: Users can deposit XLM to borrow stablecoins, overcollateralizing their holdings to manage and mitigate the inherent risks of cryptocurrency volatility.

• Pegkeeper: Users can call the functions of the treasury to liquidate debt positions through the pegkeeper when the collateral loses too much value and to perfom arbitrage trades between AMM’s. The ensuing profits are shared between the user who called the function and the Orbit Protocol.

• International Transactions: With Orbit Protocol, users can easily conduct fast international transactions in stablecoins, utilizing Stellar’s pathfinding capabilities to find the best routes for currency exchange at minimal costs.

Benefits

Orbit Protocol offers significant advantages for its users:

• Financial Stability: Provides a stable medium of exchange that shields users from the price swings typical in the crypto market.

• Enhanced Liquidity: Enables users to access liquid funds quickly by using their cryptocurrency as collateral, without needing to sell off assets at inconvenient times.

• Global Reach: Simplifies and accelerates cross-border transactions, making it easier to send and receive payments internationally with stablecoins.