Rho Markets, The native liquidity layer on Scroll

Rho Markets is the first native lending protocol on the Scroll ecosystem, based on an overcollateralized lending model backed by the Scroll team. Rho aims to be the biggest lending protocol in the Scroll ecosystem. Beyond its accessible lending solution, Rho collaborates with Sign Protocol and Plaid to transform the on-ramping process using TLS and ZK technology.

As the Scroll ecosystem expands, Rho is poised to become a central liquidity layer, supporting ongoing projects and emerging Layer 3 solutions on the Scroll platform.

We’re laser-focused on juicing up the Scroll ecosystem because that’s where the future’s at — no distractions, just pure DeFi innovation. We’re not just playing in the game; we aim to redefine it. Rho is on track to become Scroll’s unified liquidity layer. That means we’re going all-in to serve Scroll, catering to every corner of its ecosystem, including the explosive Layer 3s that are yet to come. We’re here to streamline, strengthen, and skyrocket liquidity across Scroll’s entire landscape.

Why Scroll?

Scroll is a groundbreaking zkEVM (Zero-Knowledge Ethereum Virtual Machine) that utilizes zkSNARK-proof algorithms. This not only ensures privacy and scalability but also makes Scroll inherently developer-friendly. From a technical standpoint, Scroll is the most secure ZK L2 solution. With the emergence of more L2 solutions, more DeFi protocols will move to L2. Security and cost efficiency are the two key factors for DeFi to build on L2, and Scroll has significant advantages in both aspects. For Rho Markets, this means we can develop a Market that guarantees low fees, fast confirmations, and an optimized environment for deploying complex DeFi applications.

As Scroll’s inaugural native lending protocol, Rho has benefitted from substantial support from the Scroll team. This includes funding, partnership facilitation, and technical innovation. We’ve also formed initial strategic collaborations with numerous native Scroll projects, such as PenPad

Core Services of Rho Markets

Rho Markets primarily offers lending services for users, including LRT assets as well as mainstream assets like ETH and wBTC. Additionally, users can stake $RATE to earn higher yields. Through multiple yield layers, the staking APR can reach up to 50%. Apart from the basic services, Rho Markets stands out as a leading lending protocol in the Scroll ecosystem, with the following features and functionalities:

Asset Custody: Leveraging Rho Market’s non-custodial architecture, users retain complete control over their digital assets while participating in lending activities.

User-Friendly Experience: Rho Markets provides a user-friendly interface and greatly simplifies the lending experience. Designed to be intuitive from the start, both novice and experienced users can effortlessly lend and borrow digital assets.

Robust Security: Security is at the core of Rho Market’s design philosophy. The protocol employs robust security measures to protect user funds. By prioritizing security, the Rho Markets community can confidently lend and borrow digital assets.

On-Chain Governance: Any changes or updates to the Rho Markets protocol require on-chain governance proposals. This ensures alignment with community interests and eliminates single points of failure. As a result, Rho Markets exhibits greater resilience and can withstand potential disruptions.

RWA Integration: Through integration with the Sign Protocol and Plaid, Rho Markets facilitates lending, repayment, and liquidation processes with funds directly from USD bank accounts, thereby significantly lowering the barriers to entry from the traditional web2 space.

Liquid Re-Staking Tokens (LRT)

Recently, EigenLabs launched AVS — EigenDA, a data availability solution, on the mainnet, marking the beginning of the staking era. While EigenLayer markets still have a long way to go, one trend is becoming evident: Liquid Re-Staking Tokens (LRT) will become the primary choice for restakers. Over 73% of all EigenLayer deposits are made through LRT.

The operators to whom LRT is delegated have a significant impact on overall activity, operational performance, and the security of staked ETH. However, despite the differences in structural risks, one similarity remains: LRT reduces the opportunity cost of staked capital by providing a liquid receipt token that can be used in DeFi as productive collateral or for exchange, thereby pushing them into the market.

One of the main advantages of LRT is the avoidance of traditional withdrawal periods. EigenLayer has a specific withdrawal period of 7 days. Given this core principle of LRT, we anticipate net selling pressure on them as the entry barrier for restaking is low but the exit barrier is high. Therefore, the liquidity of these LRT tokens will be their lifeline to ensure their breadth, depth, and long-term sustainability in DeFi. In this regard, we believe lending is the best way to efficiently utilize capital, especially in scenarios with low liquidity and a substantial amount of idle LRT assets.

As LRT further integrates into the broader DeFi ecosystem, especially in the lending markets, its significance as a pegged asset will significantly increase. For instance, in the current money markets, LST (specifically wstETH/stETH) is the largest collateral asset on Aave and Spark, with supply amounts of around $4.8 billion and $2.1 billion, respectively. As the integration of LRT deepens within the broader DeFi ecosystem, we expect these numbers to eventually surpass the supply of LST. This is particularly true as the broader markets gains a better understanding of risk and product structures, and as time progresses, making them more trustworthy.

Safety Module

Considering the risks associated with insufficient DEX liquidity or untimely oracle price feeds that may lead to MEV, Rho Markets has established a dedicated Safety Module. This smart contract-based system incentivizes users to contribute RATE tokens to earn additional rewards. It also serves as a mitigation tool in case of smart contract risks, liquidation risks, or oracle failures, ensuring maximum security for users’ funds. For example, the Safety Module provides up to 30% compensation or subsidies to depositors who suffer losses due to sharp market fluctuations or MEV attacks.

As these LRT tokens begin to integrate into the lending market, liquidity will become increasingly important. To ensure security and user experience, Rho Markets will attract more liquidity providers and higher TVL through token subsidies and liquidity incentives.

Loyalty Rewards Program

Rho Markets will launch the Loyalty Rewards Program, creating an accounting system for future rewards in the form of RATE tokens earned by participating in the Scroll ecosystem.

Rho XP will measure not only user engagement but also protocol engagement. With this in mind, we anticipate future decentralized governance of Scroll. In the event of such potential airdrops, we will utilize the RLP (Rho Loyalty Points) system to fairly distribute the airdrops to holders.

To reward early contributors in the fairest manner possible, we introduce Rho XP Loyalty Points (RXP). These soul-bound ERC-20 tokens will be proportionally distributed to users of both the lending and staking protocols.

You can earn Rho XP by staking $RATE or borrowing assets from the Rho Markets lending pool. When you reach a milestone, Rho XP will be distributed to you, directly tied to the total borrowing within the protocol.

The Loyalty Rewards Program is divided into two phases: Testnet and Mainnet. During the Testnet phase, launching mid-May, RXP will be allocated to users who actively engage with Rho Markets, support our DC community, and expand our network by inviting friends. In the Mainnet phase, the distribution of Rho XP will occur as follows:

• Proportional allocation to $RATE stakers
• Proportional allocation to borrowers

The more you stake or borrow and the longer you hold your position, the more RXP you can earn.

The detailed version Loyalty Rewards Program will come soon!