Lend & Borrow
Vectis Lend & Borrow provides users with the ability to both lend and borrow their crypto assets. By lending, users can earn yield on their tokens, while borrowing allows them to use their deposited tokens as collateral. The platform’s overcollateralization model ensures the security of lender funds through advanced risk management and liquidation systems.
This lending and borrowing market serves as the core of Vectis’ offerings, promoting capital efficiency while incorporating a robust risk engine to safeguard both borrowers and lenders.
Unified Liquidity Market
Vectis’ lending market is structured around a unified liquidity market instead of separate asset markets. Users can deposit any supported asset and borrow against their deposited collateral, with borrowing power determined by the asset’s weighting and Loan-to-Value (LTV) ratio.
The risk engine is designed to manage and isolate risks within this unified market, ensuring the security of lenders' funds while optimizing capital efficiency.
Interest Curve
The Vectis interest rate mechanism is divided into two key parts:
If UR ≤ optimal_ur: rate_borrow = ur/ optimal_ur * borrow_rate
If UR > optimal_ur:
rate_borrow = (ur - optimal_ur)/ (1-optimal_ur) * (max_borrow_rate - borrow_rate) + borrow_rate
ur: This reflects the current utilization of available funds in the lending pool, calculated as the ratio of borrowed funds to the total funds (both borrowed and unborrowed).
optimal_ur: This is the target utilization level the protocol aims for, where interest rates are set to maintain a balance that encourages both borrowing and lending.
borrow_rate: The interest rate borrowers pay when the pool’s utilization is at the optimal level.
max_borrow_rate: The highest possible interest rate borrowers pay when utilization exceeds the optimal level. As more funds are borrowed and utilization rises, the interest rate increases towards this maximum to manage demand and incentivize repayments, ensuring the pool’s stability
Loan-to-Value & Asset / Liability Weight
*For the first stage, JLP can only be supplied as collateral to borrrow USDC
**JitoSOL can only be supplied to borrow SOL
Deposit and Borrow Caps
Every asset within the Vectis Lending and Borrowing market is subject to specific deposit and borrow limits. These caps are determined based on the asset’s risk score, which considers factors such as market liquidity, volatility, and security risks. Caps are continuously monitored and may be adjusted if necessary to ensure the safety and balance of the system.
Liquidations
Liquidations act as a safety mechanism within the system. When a borrower’s position drops below the required safety threshold, it becomes subject to liquidation.
This process is automatic and permissionless, carried out by third-party liquidators who are rewarded for successfully liquidating a position. Borrowers who are liquidated (known as liquidatees) are required to pay a penalty fee.
Oracle
Vectis relies on Pyth oracles for accurate and reliable token price data, utilizing Pyth’s built-in safety measures to enhance the platform's risk management capabilities and ensure secure price feeds.
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