LenoLend — How it works P1

Introduction

The main product that Leno Network will launch is a decentralized overcollateralized lending product. With the goal of becoming the largest lending platform on the Juno Network, LenoLend aims for stability, low transaction fees, optimal liquidation penalty fees, collateral ratio and liquidation thresholds. We believe such a product would definitely be more user-friendly for borrowers and lenders bilaterally and will enable us to take a leading position in the Juno ecosystem.

Let’s find out what Lending & Borrow platform is and how it works

Deposit/Withdrawals

Deposit

There are no requirements about minimum or maximum deposits.

Deposit assets will be use as collateral and users can deposit their favorite tokens (available listed) to

• Earn interest rates (from lending and $Leno incentive).
• Borrow another assets (use as collateral to maximize your investment).

Withdrawals

Users can withdraw assets as long as those funds are not currently being used for other purposes such as borrowing or withdrawing.

Most importantly, the limit of protocol quantities being withdrawal could not make total pool come to empty.

Earning interest

Depositors will receive accrued earnings (interest) on their deposit assets. The earning rates adjust algorithmically for each asset based on their independent market conditions.

Collateral commitments

Before commitments, users are required to read contract thoroughly, and agree on risk acceptance, and conditions of deposited liquidity.

Borrow/Repayments

Borrow

User is required to deposit asset to be used as collateral. The deposited asset will be used as collateral for borrowing.

The maximum amount that can be borrowed depends on the amount of collaterals on the user’s account.

Borrow limit shows the maximum amount that can be borrowed by users. The general advice is to pay close attention to Borrow Utilization to avoid being liquidated. More information about liquidation can be found Liquidation and Health Factor.

Repayments

Repayments can be done directly and immediately when users are able to and need to repay.

Parameters

Collateral Factor (Loan-To-Value Ratio)

The maximum amount a user can be borrow with a specific collateral. For example, the LTV for Juno is 60%, the maximum that can be borrowed is $60 for each $100 in Juno collateral.

Liquidation Threshold

Liquidation Threshold is the percentage by which a position is defined as collateral deficient. For instance, Liquidation Threshold of 80% means that if the value rises over 80% of the collateral, the position is collateral deficient. Then the asset might be liquidated.

Reserve Factor

Reserve Factor allocates a share of the protocol’s interests to the collector contract as a reserve for the ecosystem.

It is adjusted based on the risks of the asset. For example, stablecoins are assumed as less risky assets with low reserve factors while volatile assets are assumed to have more risks with higher factors.

For example: a $100K borrow of Juno for a year, at 10% borrow APY and Reserve Factor is 15%, would result in $10 000 × 15% = $1 500 reserve fees for the protocol upon repayment.

Liquidation Bonus (Discount)

This is a bonus on the asset price paid to a liquidator when the liquidator purchases the collateral asset that has passed Liquidation Threshold.

Close Factor

The maximum amount that can be liquidated in a single transaction. For example, a close factor of 50% means that a maximum of 50% of a liquidatable account’s borrow can be repaid in a single liquidation transaction.

Health Factor

Users can borrow against their supplied assets. All positions must be over-collateralized. The risk of a position can be understood through the Health Factor, which represents the combined collateral ratios of the borrowed assets.

Interest Rate Model

Leno Network uses a compounding interest model similar to Aave.

Liquidations

A liquidation is triggered when an account’s Health Factor goes below 100%, due to its collateral value not being sufficient to cover the debt value. This might happen when the collateral decreases in value or the borrowed debt increases in value.

Leno’s liquidation mechanism is designed to make liquidators compete for the profit that they make during liquidations to minimize the loss taken by unhealthy accounts. This is achieved by introducing a variable discount with variable liquidation size, Instead of offering a fixed profit that is used in other protocols.

Note

These are Functions that are in Lending and Borrow Platform. We will publish P2 to show more details about How it works.

To be continued!!

About LENO

Website: https://lenonetwork.io

Twitter: https://twitter.com/LenoNetwork

Discord: https://discord.gg/RCFnsSAC9h

Github: https://github.com/LenoNetwork