Risks for Lenders⚠️
Risk | Alleviation |
Loss of capital: the risk of debt accrued by underwater positions in case 'Destroyer' (liquidators) do not liquidate in time during a period of high market volatility. | |
Timing of asset return: |
Last updated
Risk | Alleviation |
Loss of capital: the risk of debt accrued by underwater positions in case 'Destroyer' (liquidators) do not liquidate in time during a period of high market volatility. | |
Timing of asset return: |
Last updated
We have taken a cautious approach in setting key parameters to ensure a large buffer. We also have provided enough incentive to 'Destroyer' (liquidators) to call and liquidate applicable positions. We believe this risk scenario is very unlikely to happen.
delay in getting deposited asset back in case of the pool’s high level of utilization. Please note that 'Borrowers' (farmers) can borrow the funds as long as they like and there is no fixed term of when the funds must be returned.
We use a triple-slope interest rate to optimize for 90% fund utilization. The steep increase in interest rate beyond the 90% utilization should incentivize more lenders to deposit funds and borrowers to return outstanding loans, bringing the pool back to an optimal level.