A few months back, Pashov Audit Group audited @PeapodsFinance’s LVF upgrade. Over a 4-week audit, it became clear how LVF’s fundamentally novel approach to yield & leverage can be a game-changer for DeFi, ultimately leading me to become $PEAS liquid investor 🧵

2/ Imagine a protocol that allows you to: • Earn single-sided, real, sustainable yield • Obtain extra-safe leverage • Borrow ETH + stables All on/against ANY token. This is what we saw looking at Peapods' LVF codebase. Quite interesting, eh?

3/ So, how does it work? Peapods pioneered Volatility Farming, letting users earn real yield from the natural ups & downs of crypto prices, by taxing arbitrage bots. Volatility Farming turns market volatility from a necessary evil into a way to generate sustainable profits.

4/ Anyone can create a ‘Pod’ - a vault that wraps any token for a pToken. pTokens are fully backed and can be redeemed for the underlying by unwrapping. Since pTokens are traded on DEXs, price differences emerge vs the underlying token as markets move.

5/ This creates arbitrage opportunities. To close these, (un-)wrapping must occur, generating protocol fees that are distributed as yield to Pod LPs and other stakeholders. More volatility → more protocol fees → more yield. Hence the name ‘Volatility Farming.’

6/ A friction point in OG Volatility Farming was the need to hold 50% of position value in a paired asset to LP and earn yield. This is where Leveraged Volatility Farming (LVF) comes in.

7/ LVF natively integrates lending markets into Volatility Farming, allowing users to simply borrow the paired asset needed to LP. Outcome: increased efficiency & profitability. Users earn 2x yield while keeping full exposure to their favorite asset.

8/ LVF introduces Self-Lending Pods: through paired asset abstraction + flashloans, a user can bootstrap an entire Pod by borrowing from themselves🤯 This instantly creates the LP and locks in demand, without needing anyone else to supply first.

9/ Peapods calls this mechanism “Proof of Demand” (POD). The user sets up the position and becomes the first borrower themselves. From block #1, the Pod is at 100% utilization, clearly signaling the market there’s already demand willing to pay.

10/ Instead of waiting for suppliers or bribing them with emissions, LVF flips the model: demand is locked in immediately, and interest rates keep rising until someone steps in for the high APR. This fundamentally solves the chicken-and-egg problem.

11/ On the supply side, a unified liquidity layer of Metavaults ensures best risk-adjusted yields by automatically allocating funds to Pods based on just-in-time demand and risk. $PEAS holders will set caps and boundaries through token voting.

12/ Together, these features prime Peapods as an emerging DeFi one-stop shop, delivering: • Best-in-class single-sided yield on any token • Extra-safe leverage on any token • Borrow ETH + stables vs any token • Free liquidity rails for projects We enjoyed auditing this design - strengthening oracle safety, validating liquidation logic, and ensuring LVF’s novel mechanisms hold under stress🫡