Scallop Protocol is a peer-to-peer money market for the Sui ecosystem and is also the first DeFi protocol to receive an official grant from the Sui Foundation. ^[1][2]

Overview

Scallop Protocol launched on the Sui mainnet in July 2023, garnering attention for its intuitive user interface, features, and robust security measures. It achieved significant milestones, including reaching an all-time high Total Value Locked (TVL) of $156 million, facilitating over $15 billion in total lending and borrowing volume, and processing over $2 billion in Flash Loans volume. ^[1][3]

On March 3, 2024, Scallop Protocol raised $3M in an investment round. The Q1 2024 Investment Round featured participation from various notable investors, including KuCoin Labs, Blockchain Founders Fund, Oak Grove Ventures, Side Door Ventures, UOB Venture Management, Signum Capital, Cypher Capital, Mysten Labs, Kyros Ventures, Criterion, 8186 Capital, 7UpDao, LBank Labs, ViaBTC, Cetus Protocol, AC Capital, and Zellic. ^[3][10]

"With this funding, Scallop Protocol will be able to scale and integrate new features to enhance the user experience and become the leading All-In-One DeFi protocol. Some features that Scallop Protocol has pushed includes a Flash Loan SDK, Scallop Swap powered by Aftermath Finance, and many more." ^[10]

“We are extremely grateful for the continuous support provided by our investors, as it enables us as a project to grow and develop more products to become the leading DeFi project on Sui Network.”^[4]

Scallop Protocol has also formed a wide network of partnerships with projects like Aftermath Finance, Haedal Protocol, FlowX Finance, Typus Finance, KriyaDEX, OKX Wallet, etc. Scallop Protocol was also made open-source, thus allowing for projects on Sui to build upon Scallop such as Kai Finance and SuiPearl. ^[4][10]

Scallop on Sui

Lending

In DeFi, lending your tokens to borrowers in lending-borrowing protocols can earn you additional token rewards. Borrowers pay interest on the borrowed amount, which you, as a lender, receive as a reward for providing your funds. ^[7]

Asset Pools

Asset Pools suppliers can earn interest through deposits and can withdraw assets at any time. Assets in Asset Pools will be borrowed by borrowers who already deposited enough collateral assets as collateral, and they will also count the interest with time. ^[7]

sCoins (Scallop Market Coins)

sCoins are issued on Scallop, a decentralized financial money market, to users who supply various cryptocurrencies to its lending pools. Each sCoin represents a specific supply, such as sSUI for SUI supplies or sUSDC for USDC supplies. ^[8]

Scallop, like Compound collateral tokens, tokenizes debts using sCoins (Scallop Market Coins). sCoins have an increasing value, indicating deposited coins in asset pools and enabling asset claims. They facilitate position building without direct interaction with underlying assets and can be utilized to develop derivative products involving debt obligations. ^[7][8]

Borrowing

Collateral Assets

The Collateral Pools allow borrowers to deposit collateral and obtain a percentage of borrowing capacity, but suppliers cannot earn any interest from the collateral pool. Borrowers who want to borrow from the asset pool must first deposit collateral into the collateral pools, your collateral will be stored safely inside your Obligation object. ^[9]

Collateral Weight

Collateral weight is a parameter used in each of the Collateral Pools to control the ratio of coins that can be borrowed out using a collateral coin**.** ^[9]

Borrow Weight

The borrow weight feature addresses the volatility of certain coins by making borrowing them more costly. This means that borrowing volatile coins requires more collateral, limiting the borrowing capacity for such assets. Borrow weight directly influences the amount of debt incurred by users, determining their borrowing limits accordingly. ^[9]

Zero Fee Flash Loans

A flash loan is a type of loan where a user borrows assets with no upfront collateral and returns the borrowed assets within the same blockchain transaction. Because Scallop only charges fees according to the time value of the coin, and from the blockchain's perspective flash loans are held for 0 seconds, they are entirely free on Scallop (ignoring Sui gas fee costs). ^[9]

Scallop Token

$SCA

$SCA is the native cryptographically secure fungible protocol token of the Scallop protocol. It is a transferable representation of attributed utility functions specified in the protocol/code of Scallop, designed to be used solely as an interoperable utility token. ^[5]

Tokenomics & Distribution

$SCA has a total and maximum supply of 250,000,000 tokens. During distribution, 45% was allocated to Liquidity Mining, 15% to Scallop Project Contributors, 15% to Strategic Partners/Investor, 7.5% to Ecosystem/Community/Marketing, 7% to Treasury, 5% for Liquidity, 4% for Dev & Operation, and 1.5% for Advisor. ^[5]

veSCA

veSCA, a specialized form of $SCA tokens utilized by Scallop, contributes to enhanced decentralization. Holding veSCA grants owners additional benefits, thereby increasing the utility of the tokens. By reducing the number of available $SCA tokens, veSCA promotes token stability and fortifies the overall Scallop platform, playing a crucial role in ensuring Scallop's sustained success and longevity. ^[6]