Basing on the not-so-optimal collateral management scheme, existing decentralized lending protocols offer low rates for lenders and high rates for borrowers of the cryptocurrency.
The average rate for lenders August 2020
The average rate for borrowers August 2020
Is there room for improvement? HodlTree offers one.
HodlTree Protocol Overview
HodlTree is a second-generation lending protocol. Our ultimate goal is to improve the current architecture and let lenders get much more attractive interest-rates (from 8 to 20%+ APY) for cryptocurrencies, while borrowers will borrow at zero interest.
For doing this, the HodlTree uses the following scheme of collaterals placement. 80% of borrowers’ collaterals are placed in interest rates generating modules, while the other 20% are saved as a backup pool for immediate usage. Also, 80% of unused lenders’ funds are set in Interest rates generating modules, and the other 20% are saved as a backup pool for immediate lending.
Some of the principles in the interest rates generating modules are described in the patent for which we filed in February 2020*. Interest generating modules can include various decentralized structural products and combinations thereof. For example, as in the specified articles:
The calculation of rates is listed as follows:
X = a total number of funds in borrowers’ collateral (of the certain coin)
C = collateral ratio placed in interest generating modules
Y = the rate in the interest rates generating module (of the certain coin)
Z = a total number of unused funds in lenders’ collateral (of the certain coin)
R = the rate in the interest rates generating module( of the certain coin)
T = total lenders capital
A simplified example of the rate calculation:
Price of 1 ETH — 100
Alice placed 1 ETH for the lending
Bob borrowed 1 ETH on the collateral of 200 DAI
The rate in the module of interest-earning (DAI) — 10% annually
The rate in the module of interest-earning (ETH) — 1% annually
Total number of funds in borrowers’ collateral — 200
Total number of unused funds in lenders’ collateral — 0
Сollateral ratio placed in interest generating modules — 0.8
For Alice APY will account 16% APY
For Bob the borrowing cost will be 0.
Access the best solution with the HodlTree.
High rates for lenders & zero interest for borrowers
HodlTree will grant $HTRE rewards to farmers who contribute liquidity to the HTRE/USDC pools on Uniswap and Balancer. Our goal is to understand how effective liquidity mining is in reaching a wider distribution of tokens and community involvement in the protocol governance & activity in the future.
We are waiting for your feedback. Visit our website, find us on Telegram or follow us on Twitter (@hodltree) — we’d love to share our DeFi insights (#DeFinsights) and to hear your thoughts.
Azamat Malaev Co-founder of HodlTree
The Content is for informational purposes only, you should not consider any such information or other material as legal, tax, investment, financial, or other advice.