Peridot Whitepaper

Peridot introduces a novel cross-chain lending protocol that enables seamless lending and borrowing across multiple blockchain networks. By leveraging advanced cross-chain messaging and liquidity management techniques, Peridot creates unified money markets that transcend the limitations of individual blockchains.

This whitepaper presents the technical architecture, economic model, and governance structure of the Peridot protocol. We outline the challenges of existing DeFi lending platforms, particularly their chain-specific limitations, and demonstrate how Peridot's innovative approach solves these problems while maintaining security, efficiency, and decentralization.

The protocol introduces cTokens as interest-bearing assets, implements algorithmic interest rate models based on utilization rates, and establishes a robust liquidation mechanism to manage risk. Peridot's unique contribution is its cross-chain architecture, which allows users to supply assets on one chain and borrow on another without manually bridging assets.

1.1 Background and Motivation

The emergence of decentralized finance (DeFi) has revolutionized traditional financial services by creating open, permissionless alternatives built on blockchain technology. Lending protocols, in particular, have become a cornerstone of the DeFi ecosystem, enabling users to earn yield on their assets and access liquidity without intermediaries.

However, as the blockchain landscape has evolved, it has become increasingly fragmented across multiple networks, each with its own ecosystem of applications and assets. This fragmentation creates significant inefficiencies for users, who must navigate complex bridging processes to move assets between chains and manage separate positions across different protocols.

Peridot was conceived to address this fundamental challenge by creating a unified lending protocol that operates seamlessly across multiple blockchain networks. By leveraging cross-chain messaging protocols and innovative liquidity management techniques, Peridot enables users to interact with a single protocol interface while accessing liquidity across the entire DeFi ecosystem.

1.2 Limitations of Existing Systems

Current DeFi lending platforms face several limitations that restrict their utility and efficiency:

• Chain Isolation: Most lending protocols operate on a single blockchain, limiting users to the assets and liquidity available on that specific network.
• Capital Inefficiency: Users must fragment their capital across multiple chains and protocols, reducing overall capital efficiency and yield potential.
• Complex User Experience: Managing positions across different chains requires technical knowledge of bridging mechanisms and multiple wallet connections.
• Liquidity Fragmentation: Total liquidity is divided across numerous isolated protocols, leading to higher slippage and less efficient markets.
• Redundant Infrastructure: Each chain-specific protocol must independently implement and maintain similar functionality, leading to duplicated efforts and inconsistent security standards.

1.3 Peridot's Vision

Peridot aims to create a unified, cross-chain lending ecosystem that addresses these limitations through several key innovations:

• Seamless Cross-Chain Experience: Users can supply assets on one chain and borrow on another without manually bridging assets.
• Unified Liquidity Pools: Liquidity is aggregated across chains, creating deeper markets and more efficient interest rates.
• Chain-Agnostic Interface: A single user interface allows interaction with all supported chains through a consistent experience.
• Optimized Capital Efficiency: Users can leverage their entire portfolio as collateral, regardless of which chains their assets reside on.
• Decentralized Governance: Protocol parameters and upgrades are controlled by a cross-chain governance system that ensures all stakeholders have a voice.