search
Ctrlk

Lender

The Lender module manages the borrowing, repayment, and liquidation processes for Borrowers.

hashtag
Overview of Operations

  1. Borrow/Repay: Borrowers can borrow reserve assets against their delegated collateral

  2. Liquidation: Multi-stage liquidation with grace periods and bonus incentives

  3. Interest Rate Calculation: Dynamic protocol rates and fixed Borrower-specific rates

hashtag
Key Loan Parameters

  • Total Delegation: Total amount of a Borrower's received collateral from Underwriters

  • Total Liquidatable Collateral: Total amount of collateral that can be liquidated from an Underwriter

  • Total Debt: A Borrower's total debt denominated in USD. Interest accrues to Total Debt

  • Initial Loan-to-Value (LTV): The maximum amount a Borrower can borrow relative to the Total Liquidatable Collateral. A 50% LTV implies that delegations must be at least 2x the size of the borrow.

  • Current LTV: A Borrower's current Loan-to-Value ratio, calculated as

    • (Total Debt / Total Delegation) * 100%

  • Liquidation Threshold: Threshold that determines when a Borrower's position becomes liquidatable in LTV ratio. By default, the threshold is set to 80%.

  • Health Factor: Represents a Borrower's loan health

    • Calculated as (Total Delegation * Liquidation Threshold) / Total Debt

    • Liquidations are triggered when health factor is below 1

  • Grace Period: Period for Borrowers to recover health before liquidation can occur. Set to 12 hours

  • Expiry Period: Period after which liquidation rights expire. Set to 3 days

  • Target health: Target health factor that Liquidators aim to achieve when liquidating a Borrower. Set to 125%

  • Bonus Cap: Maximum bonus for Liquidators, set to 10%.

hashtag
Debt Management

The protocol has two distinct types of interest:

  1. Vault Interest: Interest paid to the Vault (stcUSD holders)

  2. Underwriting Premium: Premium paid to Underwriters who provide collateral coverage

Debt in Cap is managed via Debt tokens. Debt tokens are non-transferrable ERC-20 tokens that track a Borrower's debt. Debt tokens are minted when a Borrower borrows, and burned when the debt is repaid.

Interest automatically accrues to the debt token per asset, where the interest rate is calculated based on the interest rate mechanism. Accrued interest is handled automatically via index-based scaling, inherited from the ScaledToken base class.

For function signatures, parameters, and data structures, see the Lender Contract Reference.

PreviousMinterNextBorrow

Last updated