/simple-lending-protocol

[WIP] An experimental DeFi lending protocol.

Primary LanguageSolidityMIT LicenseMIT

Simple Lending Protocol

Borrow a dollar-pegged stablecoin against your productive cryptoassets (starting with xSUSHI) 🚀

Contract System

  • USDZ
    • Dollar-stable token, minted against collateral.
    • Mint/burn managed by Controller.
  • Controller
    • Central system manager.
    • Keeps records of users' collateralized positions, ratios, etc.
    • Keeps track of USDZ and xSUSHI prices using SushiSwap TWAP
    • Has ability to liquidate undercollateralized positions

Protocol Plan V1

MVP version, for educational purposes. Not intended for real financial use.

  • Protocol Parameters:
    • 3% annual interest on all borrowings
    • Collateral will be xSUSHI to start
    • Stablecoin (dollar-pegged) is called USDZ
    • Can borrow USDZ against collateral up to 150% collateralization ratio
    • At 150% col. ratio or lower, positions can be liquidated for the amount that would bring it back to 150% col. ratio.
    • Can only withdraw collateral if col. ratio over 200%. Can't withdraw collateral that would make col. ratio < 200%
  • Liquidation:
    • To keep things simple, liquidation will market sell the entire xSUSHI collateral via SushiSwap for USDC. USDC will then be redeemable 1:1 with USDZ. This should keep USDZ approx dollar-pegged even if it has very little trade volume.
    • liquidator executes liquidate or batchLiquidate on address(es) with debt position(s)
    • when liquidating a position, 10% of the xSUSHI is diverted as a liquidation fee, and the remaining 90% is swapped for USDC.
    • Of the 10% liquidation fee: 2% goes to liquidator, 8% to protocol treasury.
  • Borrowing:
    • Delay of 10 blocks between depositing collateral and borrowing (to prevent Flash Loan attacks, as USDZ will likely be very illiquid at the start).

The Lend-Borrow Accounting Process

  • User deposits xSUSHI by approving, then calling deposit()
    • stores amount of xSUSHI deposited, as collateral
    • emits Deposit event
  • User can then call borrow(), passing amount to borrow
    • calculates USDC value of user's xSUSHI collateral (xSushiPrice) via SushiSwap
    • calculates compound interest user owes on any outstanding debt from lastBorrowed to now (using time, not blocks)
    • calculates collateral ratio (colRatio) of user, given current debt + interest
    • if colRatio <= 200%, reverts with "not enough collateral"
    • if colRatio > 200%, user can borrow up to a 200% colRatio
    • calculates borrowable as
    xSushiPrice * ( colRatio - 200% )
    • if amount > borrowable, reverts with "amount too high"
    • sets user debt to prev debt + interest + amount borrowed
    • sets user's lastBorrowed to now (to restart interest compounding from the new total debt figure)
    • emits Borrow event
  • Anyone can call liquidate(), passing an address that has a position
    • checks if address has a position, if not reverts with "address has no position"
    • calculates totalDebt amount for address as debt + interest on the debt since lastBorrowed. This is a USDZ figure.
    • calculates USDC value of user's xSUSHI collateral (xSushiPrice) via SushiSwap.
    • calculates the colRatio of the address as
    ( xSushiPrice * collateral ) / totalDebt
    • if colRatio > 150%, reverts with "collateral ratio still safe"
    • if colRatio <= 150%, liquidation process starts
    • 90% of xSUSHI is swapped for USDC on SushiSwap
    • 8% of xSUSHI is transferred internally to protocol
    • 2% of xSUSHI is transferred internally to liquidater
    • sets user debt and collateral to 0
    • emits a Liquidation event

Protocol Plan V2

  • Gasless function calls
  • More yield-bearing collateral assets
  • Gov token that owns treasury, directs development of protocol
  • Airdrop of gov token
  • Borrowing earns gov tokens
  • Transferring earns gov tokens
  • Liquidating earns gov tokens

Resources