The Gilt Protocol is has been built to enable the creation and transfer of Gilts.

Gilts are bonds are a type of bond that separate promissory note and collateral functions of cryptocurrency. Fundamentally the holder / bearer of the gilt is entitled to the settlement funds associated with the Gilt on liquidation.

The Gilt protocol uses the ERC721 mechanism to manage ownership of the asset. The Gilt protocol is Cross Chain enabled hence users can transfer their Gilts to other chains to work with remote DeFi protocols.

The Gilt protocol homed on Arbitrum (Goerli), and leverages Chainlink CCIP for cross chain transfers.

Why Gilt Protocol

Today cross chain DeFi is extremely risky particularly with respect to security exemplified by Multichain hack (July 2023). For small holders and more compensation in such an event is a dream. Added to that post hack actions like carpet black listing addresses that have touched stolen funds has unintended community consequences.

Further more cross chain liquidity is an issue because not all tokens/protocols are supported/implemented on all chains. Hence whilst you maybe able to bridge your token there is no guarantee that the remote chain's protocols will widely accept your bridged asset. The above issues greatly limit the profit opportunities for DeFi participants.

The Gilt Protocol Solution

The Gilt Protocol provides a way of minimising the risks of Cross Chain DeFi. Users are able to interact with DeFi protocols through the use of Gilts. As a promissory note there is no raw token capital exposed to a DeFi protocol. Thus in the event of an exploit new security mechanisms targeting the affected gilt such community sanctioned transfer blocks can be deployed.

From a profit perspective Gilts enable the user to create autonomous treasury vehicles e.g. by leveraging Aave interest yielding aTokens. With a gilt the user can minimise their transfer and exchange costs as they can liquidate their Aave holding without cashing out of the Aave protocol as would be the required today.

Further when engaging in cross chain DeFi, the Gilt holder does not have to worry about liquidity of their home chain holdings as their Gilt can be collateralised directly for highly liquid local chain tokens