Rari Capital Goes Vroom Vroom

On July 21, 2022, the SEC stated that RGT is a "crypto asset security". Note: (1) Messari does not provide financial or trading advice - our services are for informational purposes only; and (2) Messari's services are impersonal - do your own due diligence. Please refer to our Terms of Use for more info.

Rari Capital launched in the fall of 2020 as a yield aggregator focused on helping users generate yield on their cryptoassets. Since then, the team has built out yield pools focused on both stablecoin yield and leveraged yield farms like the recently exploited ETH pool. Now, Rari, in addition to making right by the exploit, is widening the scope of their platform to lending with a new protocol launched in March called Fuse.

When Rari first launched it was a pure yield aggregator, and operated in a highly competitive sector. Yearn currently dominates the sector with over $3.5 billion TVL — almost $2 billion more than the next largest protocol. One of the many reasons why the yield aggregation sector is so competitive is that these protocols rely on the same common DeFi primitives to generate yield strategies. Many strategies rely on DeFi primitives like Compound and Aave which provide money markets for yield and leverage.

These money market protocols work by allowing users to deposit assets into a large pool from which other users may borrow from, providing yield to depositors. A singular pool with all assets provides users convenient features of consistent interest rates across assets as well as deep liquidity for each asset supported. However, since all assets in the money market are in a single pool, they share risk - if one asset is toxic, contagion may spread to every other asset in the pool. Because of this, protocols like Compound and Aave have to be selective on which assets are permitted to the money market pool. Not to mention governance processes which can be a speed bump as well.

As a yield aggregator platform, this creates a competitive environment due to the single rate which all other aggregators use while also limiting the assets which are available for leverage or use as collateral.

This is where Rari Capital looks to accelerate forward DeFi with their new product — Fuse.