VII Finance (Lending Protocol)
VII Finance extends the Euler v2 Protocol functionality to allow Uniswap Liquidity Positions to be used as collateral in any Euler vault built with the Euler Vault Kit (EVK).
Euler v2 is a modular protocol. It has an Ethereum vault connector that is not opinionated and only handles authentication. On top of that, the Euler Vault Kit is built, which handles lending and borrowing of ERC20 tokens. So, on top of the Ethereum vault connector, we have built collateral-only vaults that accept Uniswap Liquidity Position NFTs as collateral.
These vaults take Liquidity Positions from the user and let EVK vaults know how much they are worth. EVK vaults can then issue debt against this collateral. Before the collateral value drops below the debt, the EVK vaults ask the collateral-only vault to transfer the collateral from the violator to the liquidator. The liquidator can then extract the raw asset from the liquidity position. For any operation that reduces a user's health (removing part of the liquidity, etc.), the collateral-only vault makes sure to ask Ethereum vault connector to fail the transaction the operation if the user's position becomes underwater.
Of course, these collateral-only vaults also accept liquidity positions in pools with the Yield Harvesting Hook as collateral as well.