IMPORTANT NOTICE: The Defrost V1 is currently obsolete and all incentives have been terminated.
The Defrost V1 is a decentralized protocol that allows users to utilize liquidity pool (LP) tokens and other pool tokens from various Avalanche and cross-chain protocols as collateral for generating H2O, a soft-pegged stablecoin native to the Avalanche ecosystem.
The protocol helps users improve capital efficiency from assets locked in pools or vaults, providing additional yields from features such as farming, borrowing, staking, and swaps.
The Defrost V1 gave birth to H2O, which is backed by existing collateral with a soft peg to 1 USD. H2O can be minted by depositing collateral such as liquidity provider tokens from AMM (automated market maker) dexes (decentralized exchanges), lending, and other DeFi protocols.
The project created a stablecoin that is not USD-backed and at the same time releases more liquidity from Liquidity Provider tokens (LP tokens).
H2O is a stablecoin or a leveraging tool that can be minted by staking different LP tokens or other pool tokens in a vault, which are over-collateralized. It is soft pegged 1:1 to the U.S. Dollar. Its stability is not mediated by any central party, nor does its solvency rely on any centralized authorities. LP tokens or pool tokens with abundant liquidity and market value can be used as collateral to mint H2O. This means that all circulating H2O is generated from vaults in Defrost smart contracts, and it can be used in the same manner as any other cryptocurrency.
MELT is Defrost's utility token, a governance token with a fair launch distribution model. MELT can be used for rewards, fees, insurance and voting power in the protocol. It will be distributed via a fair launch distribution model. The majority of MELT tokens will be distributed to H2O suppliers and holders.