Permissible collateral to debt ratio is a value calculated by the protocol. It assess various parameters to find the reliability and loan-to-value (LTV) ratio of a borrower such as repayment history, collateral to debt correlation, and overall market risk.
Automated Liquidity Provision emphasizes the importance of allocating the entire loan amount to a user's preferred liquidity pool and simplify record-keeping.
- Here, the protocol divides and allocates a loan amount to a user's preferred liquidity pool.
- Ideally, there should be nothing left from the loan amount because it makes record-keeping complicated.
- For example, if someone takes a $1000 loan and chooses the USDT/ ETH pool, the entire $1000 must be added as liquidity to this pool.
- With this problem statement, we concluded that the following should provide us with what we seek:
get_amount_out(x) = quote(1000 - x) [JediSwap functions]
- Readjusting the equation to the standard form would give:
Slippage refers to the difference between the expected or requested price of a trade and the actual price at which the trade is executed. It is commonly observed in markets with high volatility, low liquidity or token pairs in low demand.
It's important to note that during the initial phase with low TVL (Total Value Locked), higher slippage cases are more likely to occur. Blocking a trade due to slippage can result in a dissatisfied user experience. As a trade-off, larger slippage is authorized until the TVL of the asset grows to a healthy liquidity level.
Debt management is a process that involves borrowing assets and issuing loans. Borrow contracts have the special ability to interact with supply contracts in order to borrow assets for issuing loans, and to liquidate the collateral for closing those loans. They are responsible for returning the funds, along with interest on loan closure, to the respective supply vault, and for freeing up any remaining collateral.
To assess the financial status of a token, we analyze its total current debt in relation to the current value of underlying loans and collateral(s).
Health is monitored in two levels:
- 1.dToken level: Determines the total health of the protocol for this asset
- 2.User loan level: Determines health of a user’s individual loan
On Hashstack, all loans are isolated margin loans. When a user wants to take out a loan, they must choose a supply market and specify the quantity of assets they want to use as collateral. The protocol then verifies the quantity of rTokens (representing the supplied assets) to ensure that enough supply is pledged as collateral.
Once the rTokens are pledged, they cannot be transferred (i.e, cannot be staked elsewhere or unstaked) until the loan is closed. This process is referred to as "locking" of the rTokens. In the protocol, only the borrow smart contracts have the power to lock or unlock the spending of rTokens.
- Hashstack requires a strong upgrade structure to handle integrations and new functionalities while maintaining previous user balances without migration.
- The Open protocol is designed using the Modular Smart Contract standard, which closely mirrors the Diamond standard.
- The Open protocol Diamond contains the core Open functionality, while the L3-Integrations Diamond contains all the integration functionalities.
- The two Diamonds allow for independent addition of integrations or new functionalities in a modular and seamless fashion.