Idea is to use liquidity available on L1 on L2. To enable people for various advantages like to take FlashLoans on chains where a lot of liquidity isn't available. Which would enable users to take make most of arbitrage opportunities and various other benefits.
To enable people to use their funds on chains where a lot of liquidity isn't available. Which would enable users to take make most of the arbitrage opportunities and various other benefits. Assuming there exists a bridge for communication between L1 and L2. We have developed a bridge between L1 and L2 where funds while being locked on L1 can earn an APY. We deposit the funds to a quality protocol like AAVE or Uniswap.
How it's made
Liquidity Providers Layer 1 1. A contract will be deployed on Ethereum(Mainnet Contract) that would allow liquidity providers to provide liquidity to the protocol. 2. The liquidity provided by the protocol would be deposited into some other protocol to generate APY say AAVE. 3. Also corresponding to the deposited amount by liquidity providers our protocol tokens(say Flash Loan Tokens alias FLTokens) would be minted on layer 2 belonging to the same user who deposited funds on layer 1. 4. The ETH deposited on L1 will directly mint FLToken on L2. These FLTokens can be used for flash loans. 5. If the users want to take out their collateral they would call a withdraw function on L2 and that would transfer locked ETH to the user on L1. 6. Alternatively, a user can get faster withdrawal with an AMM on L2 or any faster withdrawal schemes. 7. The value of our tokens would be pegged to ETH as FLTokens is always minted proportionally to backed collateral of ETH on L1. ### Layer 2 1. The tokens minted on layer 2 can be locked by the user in our protocol's contract on layer 2. Users (those who want to take a flash loan) Layer 2 1. Users can take a flashLoan of any amount present in the contract. There is gonna be a fee associated. Governance All the users holding the protocol tokens can take part in governance and based on voting it can be decided how the money should be invested on L1 to generate APY and certain strategies can be run on it.Technologies used