Overview
Proof of Efficient Liquidity (PoEL) is a capital-efficient staking mechanism designed for Supra's Proof-of-Stake network that enables DeFi applications to bootstrap liquidity while enhancing network security. PoEL allows liquidity providers (LPs) to maximize capital utility by using their LP tokens as collateral to borrow native SUPRA tokens for staking.
What is PoEL?
PoEL solves the circular dependency problem in DeFi: applications need liquidity to attract users, but users need attractive returns to provide liquidity. Traditional liquidity mining programs often suffer from:
Wash trading and manipulative activities
Opportunistic capital that exits quickly after farming rewards
Limited capital efficiency as assets sit idle in single-purpose pools
Network security concerns when staking participation is low
PoEL addresses these challenges through:
Dual income streams for liquidity providers
Dynamic risk management with automated collateralization
Network security enhancement through diversified staking
Capital efficiency optimization using the same assets for multiple purposes
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