Lending Engine

Our Borrow & Lend feature allows you to interact directly with our on-platform money market protocol, providing opportunities to earn yield on your idle assets or borrow funds for your trading strategies by supplying collateral.

Opportunities

• Deposit Assets to Earn Yield: Supply your assets to our lending pools and earn a variable yield. Your deposited assets become available for other users to borrow, and you receive the interest paid by borrowers.

• Borrow Assets with Collateral: After depositing eligible assets as collateral, you can borrow other supported assets to facilitate your trading activities or pursue other investment opportunities. Borrowed assets accrue a variable interest rate.

Key Principles

In general, users who borrow assets pay interest, and these interest payments are then distributed to users who have deposited those assets. Currently, depositing and borrowing the same asset simultaneously is not supported.

Deposit and Borrow APR:

The Annualized Percentage Rate (APR) for both depositing and borrowing assets is dynamic and determined by an interest rate curve that reacts to the asset utilization rate. Each asset has its own utilization rate (total amount borrowed divided by the total amount supplied), and therefore, the APR will vary between different assets.

Borrow Interest Rate Calculation:

The borrow interest rate for each asset is calculated algorithmically based on its current utilization rate (u). The calculation follows a piecewise function with an inflection point at the optimal utilization rate (u_opt​):

• If the current utilization rate (u) is below the optimal utilization rate (u_opt​):$\text{Borrow Rate} = (u/u_{opt}) \times (b_{opt} - b_{min}) + b_{min}$

• If the current utilization rate (u) is equal to or above the optimal utilization rate (u_opt​): $\text{Borrow Rate} = (u - u_{opt})/(1-u_{opt}) \times (b_{max} - b_{opt}) + b_{opt}$

Where:

• u: Current Utilization Rate = Total borrows / Total supply

• u_opt​: Optimal Utilization Rate = The point at which the interest rate curve steepens

• b_min​: Minimum Borrow Rate = The base borrow rate when utilization is 0%

• b_opt​: Optimal Borrow Rate = The borrow rate at the optimal utilization rate (uopt​)

• b_max​: Maximum Borrow Rate = The borrow rate when the utilization rate reaches 100%

This piecewise function results in an interest rate curve where the increase in borrowing costs is gradual when the asset utilization is below the optimal level. As utilization surpasses the optimal point, the borrowing rate increases more sharply. This steeper increase is designed to incentivize more deposits into the pool, helping to balance supply and demand.

Interest Payments:

Interest accrued by borrowers is automatically and directly distributed to depositors in proportion to the amount of assets they have deposited. All interest payments received by depositors and interest owed by borrowers are accrued to their respective accounts automatically.

Money Market Risks:

TODO