**Raft Finance** is an immutable, decentralized lending [DeFi](https://iq.wiki/wiki/defi) protocol that enables users to borrow and lend assets using their [staked Ethereum](https://iq.wiki/wiki/lido-staked-ethereum-steth) position (Lido Finance’s stETH) as collateral. Raft also enables the generation of R, a decentralized USD [stablecoin](https://iq.wiki/wiki/stablecoin), by opening a CDP (collateralized debt position), or by depositing stablecoins into the Raft protocol reserve. [\[1\]](#cite-id-9io1cv113p9)[\[2\]](#cite-id-qikg8fj1f4l)[\[3\]](#cite-id-sqbin39xkve)  
  
# Overview  
  
Officially announced in March 2023, Raft is built on [Ethereum](https://iq.wiki/wiki/ethereum), and enables [ETH](https://iq.wiki/wiki/ether-eth) stakers to earn yield while borrowing R, making it a capital-efficient stablecoin. Users can deposit stETH into a Raft position, borrow R with an over-collateralization ratio of at least 110%, and pay zero fees. While users hold and use R, they keep earning their [stETH](https://iq.wiki/wiki/lido-staked-ethereum-steth) rewards. [\[2\]](#cite-id-qikg8fj1f4l)  
  
On June 5, 2023, the Raft app [mainnet](https://iq.wiki/wiki/mainnet) went live. [\[8\]](#cite-id-aqgx0kieykb)[\[9\]](#cite-id-9k0qb3jkdg7)  
  
On June 27, 2023, the Raft team announced the integration of a liquid staking token (LSD), [rETH](https://iq.wiki/wiki/reth), into Raft. [\[11\]](#cite-id-p84h2byptkp)  
  
> "This addition aligns with our commitment to offer our users a growing range of liquid staking assets. rETH, by [Rocket Pool](https://iq.wiki/wiki/rocket-pool), represents staked ETH and brings unique features to the table."[\[11\]](#cite-id-p84h2byptkp)  
  
The integration of rETH into the Raft protocol opens up avenues for capital efficiency and financial freedom by introducing Diverse Collateral Options, Enhanced Capital Efficiency, and Robust Decentralization. [\[11\]](#cite-id-p84h2byptkp)  
  
On September 27, 2023, Raft announced its integration with [Chainlink](https://iq.wiki/wiki/chainlink) CCIP—the industry standard for secure cross-chain interoperability. [\[14\]](#cite-id-io3573n85ii)  
  
> "In order to help secure our cross-chain stablecoin transfers, we needed access to a highly secure and reliable interoperability solution. After reviewing various solutions, we selected Chainlink CCIP because it provides a multitude of important benefits and features" - the press release stated. [\[14\]](#cite-id-io3573n85ii)  
  
On October 10, 2023, Raft initiated Wave 1 of the RAFT [airdrop](https://iq.wiki/wiki/airdrop) for eligible users to claim their tokens. 1.5% of the total RAFT supply (37,500,000 RAFT tokens) was allocated to the airdrop and claiming started on 11 October 2023. [\[13\]](#cite-id-pdpr3rxhawr)  
  
## Raft's One-Step Leverage  
  
Introduced in April 2023, Raft's solution called "One-Step Leverage" makes leveraging [stETH](https://iq.wiki/wiki/lido-staked-ethereum-steth) a gas-efficient and straightforward process, eliminating the need for folding and improving the user experience. Raft uses its Flash Mint mechanism to achieve this. Flash Mint is a mechanism that allows users to borrow R like a Flash Loan but without the need for a [liquidity pool](https://iq.wiki/wiki/liquidity-pool). [\[10\]](#cite-id-77c0iak0xxi)  
  
# The R Stablecoin  
  
R is a USD [stablecoin](https://iq.wiki/wiki/stablecoin) backed by both collateralized debt positions (CDPs) such as [stETH](https://iq.wiki/wiki/lido-staked-ethereum-steth) (Lido Staked Ether) and [rETH](https://iq.wiki/wiki/reth) ([Rocket Pool](https://iq.wiki/wiki/rocket-pool) ETH) and protocol reserves such as CHAI, the yield-bearing version of the [DAI stablecoin.](https://iq.wiki/wiki/dai) [\[4\]](#cite-id-ut6cl0zlreh)  
  
R is the stablecoin which uses a combination of hard peg and soft peg mechanisms to maintain its peg value of 1 USD. [\[3\]](#cite-id-sqbin39xkve)  
  
The hard peg mechanism relies on arbitrage opportunities to maintain the stablecoin price aligned with its stETH backing assets and always within the price band of 1 USD to 1.10 USD. This is done through two mechanisms: redemptions and over-collateralization:  
  
Redemptions allow R stablecoin holders to redeem it for the equivalent value in wstETH (wrapped staked ETH) collateral. Whenever a user redeems their R tokens, these tokens get burned by a smart contract, reducing the R circulating supply and increasing its price. This implies that redeeming R tokens for wstETH is economically convenient only when R trades below 1 USD. [\[3\]](#cite-id-sqbin39xkve)  
  
Over-collateralization creates an upper boundary for the R price. Users can deposit the upper boundary amount worth of wstETH, mint 1 R, and sell it on the open market for more than the upper boundary worth to lock in a riskless profit when the R price exceeds this level. [\[3\]](#cite-id-sqbin39xkve)  
  
Meanwhile, the soft peg mechanism of R stablecoin relies on the ability of a stablecoin design to incentivize users to act based on the expectation that the peg will be kept in the future. This is done by creating a Schelling point to which the system tends to return after temporary deviations. [\[3\]](#cite-id-sqbin39xkve)  
  
# Governance  
  
The Raft DAO is governed by RAFT tokenholders. The [DAO](https://iq.wiki/wiki/dao) is responsible for the long-term growth of the Raft protocol. Changes to Raft Protocol and allocation of Raft treasury funds are made through a governance process, which includes an initial proposal, a temperature check, a snapshot vote to validate the proposal, and lastly, execution of the proposal that was voted in favor. [\[7\]](#cite-id-d2df2pj98ye)  
  
## RAFT Token  
  
RAFT is the native token of the Raft ecosystem with two core functions: Governance and [Staking](https://iq.wiki/wiki/staking). The RAFT token total supply is 2.5 billion, and its allocation is reported in the chart below: [\[5\]](#cite-id-yh12env27v)  
![image](https://ipfs.everipedia.org/ipfs/QmSqsDmX9xGgiiTMwzebgkqVpsKg9dxfsAauv3xUFt7aCm)  
The RAFT token serves as the core element of veRAFT. Notably, veRAFT enables the exchange between RAFT and R, resulting in the scaling of RAFT liquidity alongside Governance. [\[5\]](#cite-id-yh12env27v)  
  
## veRAFT  
  
veRAFT was introduced on October 10, 2023. Based on [Balancer's](https://iq.wiki/wiki/balancer) veBAL, veRAFT is a non-transferable token that can be used to vote and govern the Raft DAO. veRAFT is obtained by providing liquidity into the RAFT/R 80:20 Balancer pool, [staking](https://iq.wiki/wiki/staking) the Balancer LP token (BPT) into the veRAFT contract, and receiving vote-escrowed (ve) RAFT tokens. The veRAFT tokens are non-fungible and their balance expresses the voting power and the share of rewards their holders are entitled to receive. [\[6\]](#cite-id-gp78l4xghve)[\[15\]](#cite-id-4xe0ac8oczc)  
  
veRAFT holders vote on proposals related to the protocol. These proposals cover a wide range of topics, from determining which pools to incentivize with RAFT to allocating and managing treasury funds. [\[6\]](#cite-id-gp78l4xghve)[\[15\]](#cite-id-4xe0ac8oczc)  
  
# Raft Bond  
  
On October 30, 2023, Raft launched its inaugural bonding program, powered by [Bond Protocol’s](https://iq.wiki/wiki/bond-protocol) permissionless infrastructure. Bonds enable protocols to issue vested tokens to secure strategic assets. For Raft, the bonds are issued with R as the quote asset and RAFT as the payout asset. [\[12\]](#cite-id-lok9oaggi5)

Date Founded

One-Step Leverage was introduced in April 2023

One-Step Leverage Launch

R Mainnet Launch

On September 27, 2023, Raft announced its integration with Chainlink CCIP

Raft x Chainlink CCIP

On October 30, 2023, Raft launched its inaugural bonding program

Raft Bond Launch

image

Raft is a DeFi protocol that allows users to borrow and lend assets using staked Ethereum as collateral, and generate the R, a USD stablecoin.

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Timeline of Events

Raft

Date Founded

One-Step Leverage Launch

R Mainnet Launch

Raft x Chainlink CCIP

Raft Bond Launch

IQ

Company

Resources

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