A gap in the sector

DeFi has long been missing one key piece of infrastructure — an effective prime brokerage. In traditional finance, prime brokerages offer yield products with high leverage from various sources. Undercollateralized lending is needed to offer prime brokerage services consisting of yield products with various risk profiles. Money markets like Aave or Compound have been instrumental primitives for DeFi but fall short in this crucial area due to low loan-to-value (LTV) caps.
This gap in DeFi prevents users from taking full advantage of the yield products available, while the protocols that provide those yield products have less liquidity because LPs don’t want to take on smart contract risk in exchange for low yield. DeFi can’t compete with traditional finance if this piece is missing. Real yield in DeFi will rarely be worth the risk if yields need to be heavily subsidized with token incentives to outpace traditional finance and secure, undercollateralized strategies don’t exist.
Blueberry delayed its launch and took a step back during the bear market to nail down security measures and perfect a much-needed product. Today, we’re excited to announce that we’ll be ready to bring Blueberry Protocol to the market in the next few weeks.

What’s missing?

Current decentralized prime brokerage models miss the mark in a number of ways and have yet to find their fit in the market. A trustless financial system requires strict risk mitigation measures when introducing leverage, making it very difficult to offer a generalized leverage product. Perpetual futures decentralized exchanges (perp DEXs) offer easy access to leverage but are limited to trading, and only against a specific pool of assets. Protocols that attempt to tackle the issue of generalized leverage often misappropriate risk, leading to a bottleneck of liquidity, potential for exploits, and/or a lack of opportunity, which diminishes the benefit of generalized leverage.
A truly generalizable prime brokerage model in DeFi requires top-of-the-line risk controls. Integrating newer protocols can be a cumbersome process when reconsidering risk profiling constantly. Starting with a strong framework that can be broadly applicable and has custom risk levers for different assets allows the process of defining risk to be more lightweight yet more in-depth. Risk can be segmented into different verticals where necessary to allow users operating in lower risk areas to take on more leverage.
A straightforward yet complete approach to risk management makes the difference between 50x leverage and 5x — between a user providing capital and not providing.

Enter Blueberry

Blueberry aims to fill this gap by providing yield products with best-in-class security and segmented risk profiles across assets and strategies. This approach will allow for the integration of any onchain position with leverage. This leverage can go as high as 50x for some lower-risk strategies, and as low as 5x for some of the more volatile options. New strategies can be implemented via a lightweight governance process — at launch, Blueberry will already support a wide variety of strategies with the ability to lever up like never before.
For example, Blueberry will allow users to position with up to 50x leverage on the following strategies:

• Yield farming (Curve, Convex, Balancer, etc.)
• Yield arbitrage
• Money market lending
• Spot trading (via Paraswap)
• Concentrated liquidity strategies

So long as a comprehensive risk measure is set and the strategy passes governance, any position can be leveraged using Blueberry.
Lenders can supply single-asset collateral to Blueberry in order to earn yield and provide leverage strategies for borrowers, earning dynamic interest rates and $bdBLB (more on this later). Borrowers using this liquidity can operate any strategy they choose, all from a clean and easy-to-use interface provided by Blueberry.

Looking forward

DeFi has long been unable to take a big step forward due to the lack of risk-adjusted leveraged strategies. Attracting liquidity, offering liquid products like trading or lending/borrowing, and safely earning high yields has been incredibly difficult to do all at once. With a decentralized prime brokerage model like Blueberry’s, all of these issues will be addressed on the integrated protocols. At launch, Blueberry will be a simple avenue for liquidity providers to earn greater yields than they would anywhere else on battle-tested strategies with proper risk management. In the medium term, protocols will be able to introduce new strategies to help bootstrap liquidity and bring new LPs to their protocol. In the long term, Blueberry will be a hub for any on-chain position to be charged with high leverage, transforming the landscape of DeFi.