The lenging module principles

We don't want to be another lending protocol, but we want to have more borrowing capabilities to scale market-making vaults, so we decided to add the lending module. It will consist of 2 types of actors:

• Lenders They will be able to stake their volatile altcoins, gaining returns based of pools utilization.

• Borrowers In fact noone will be able to borrow tokens itself, but to enter delta-neutral vaults, that will borrow and keep tokens inside the protocol.

So effectively it can be thought as highly overcollateralized leding: user deposits his stablecoins as collateral -> volatile tokens are being borrowed from lending pools -> they are then deposited into market making vault and kept there safe.

Market making vault then can incur only losses caused by IL, that usually have scale of percent units, >10% when prices change by tens of percents and can go very bad only if one of underlying tokens fully collapses.

For now we only focus on USD-notioned yield, so initially only best stablecoins (USDC, DAI, USDT) will be added as collateral. To manage risks of tokens listed for lending and borrowing we'll look at:

• Token liquidity on-chain and off-chain We'll only include tokens listed on major CEXes and DEXes, having at least millions of dollars locked as liquidity and decent trading activity.

• Protocol's history and economic model Protocol is needed to be audited, having good hacks history and consistent economic model

• Tokenomics Token design needed to be extensively examined to exclude unexpected unlocks and rug-pools

• Protocol's team, backers and treasury Will the protocol pay compensations for their users in case of collapse? Do they have enough funds in treasury to repay bad debt in case of their failure?

• Oracle support Oracles are the key part of any lending protocol and liquidation process.

• Insurance We plan to collaborate with isurance protocols as Nexus Mutual and InsurAce to protect users funds and need to know if they can work with specific token.