Blizz is a decentralized lending and borrowing protocol built on the Avalanche blockchain. Blizz Finance is based on one of the most significant DeFi protocols: AAVE. At Blizz, depositors provide liquidity to the market to earn funds, while borrowers can borrow in an overcollateralized or undercollateralized fashion.
Overcollaterized is used by the borrowers when the provision of collateral worth is high compared to the possible losses at the time of default. Collateral is defined as any asset that the lender accepts as a security from the borrower, while undercollateralized is any loan that is not fully collateralized. Herein, if the loan has defaulted, the collateral would not fully cover the principal.
Borrowing allows obtaining liquidity (working capital) without trading assets. Users usually borrow for leveraging their holdings or for new investment opportunities. Before borrowing, any asset needs to be deposited as collateral.
Moreover, the maximum amount to borrow depends on the value deposited and the available liquidity. Also, to repay this loan amount, the user has to do in the same asset as borrowed. For instance, if one ETH is borrowed, one ETH + yield gained is the payback. Here, the yield depends on the borrowing rate derived from the asset's supply and demand ratio.
Furthermore, Blizz features revenue sharing between token holders and liquidity providers. Fifty percent of the revenue generated via borrowing is directly distributed to the users who stake BLIZZ. Both lenders and borrowers are rewarded with BLIZZ to incentivize the protocol used. Users can exit staking anytime without a penalty.
Like staking, there is locking in which users receive a share of protocol fees. The rewards are vested for three months but can be claimed immediately for a 50 percent penalty. This penalty is distributed among the users who lock BLIZZ for three months. Thus, BLIZZ stakers receive protocol fees while BLIZZ lockers receive both protocol and exit penalties from users who exit their vests early.
A total of one hundred million BLIZZ is allocated to airdrops that aim to incentivize users who use and support the protocol. These tokens are released linearly over one year. This continuous release enables the protocol to re-evaluate where resources can be best allocated to support the protocol.
