20%+ for lenders & 0% for borrowers. Is it possible? Absolutely.

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.

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The average rate for lenders August 2020

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The average rate for borrowers August 2020

Is there room for improvement? HodlTree offers one.

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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:

A simple guide to making your APY 300% and higherHow to create a decentralized structured product that outperforms ETH

We use Chainlink as an oracle and Paraswap as a part of an external module for the liquidation.

The calculation of rates is listed as follows:

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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

(2000.80.1+00.80.01)/100=0.16

For Alice APY will account 16% APY
For Bob the borrowing cost will be 0.

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Access the best solution with the HodlTree.

High rates for lenders & zero interest for borrowers

We will announce the details of the HodlTree token Liquidity Mining pilot on Monday 21 September!

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.

Our pools:

[Uniswap Pool]
[Balancer Pool]

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.

Stay tuned
Twitter Telegram

Azamat Malaev Co-founder of HodlTree

Disclaimer

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.