RUJI Lending
RUJI Lending is a decentralized money market connecting lenders and borrowers of crypto assets. It enables lenders to earn interest on their tokens, and borrowers to secure loans against their crypto collateral.
Key Features
Lending: Generate passive returns by lending out your tokens, with a fairly low risk profile (all loans are overcollateralized). Lenders supply assets in exchange for a vault receipt token, which accrues interest over time. The receipt token is transferable and can be used in other dApps, or redeemed back for the original asset plus accrued interest. Deposits can be withdrawn at any time, as long as asset utilization remains under 100%.
Borrowing: Unlock liquidity in the form of overcollateralized loans, without selling your crypto assets. Borrowing is permissionless; no credit checks or lengthy applications required. No minimum or maximum loan duration, you can partially repay or fully close your position at any time.
Overcollateralized: All loans are overcollateralized, meaning that at a maximum (illustrative) 75% Loan-To-Value ratio (LTV), there is always >$1 of collateral backing each $0.75 worth of debt.
Cross-marginated: Under the hood, each borrowing positions exist in a Credit Account in which you can deposit any supported collateral (e.g. regular tokens or LP tokens). Each collateral type has a corresponding collateral ratio, which is a risk-adjusting factor applied to your collateral value to define how much you can borrow against it.
For example, BTC has a collateral ratio of 70% (meaning you can borrow up to $70 for every $100 worth of BTC), and DOGE has a collateral ratio of 60%. If you have $100 worth of BTC and $100 worth of DOGE in your Credit Account, your total Adjusted Collateral Value will be: $100*70% + $100*60% = $130, which will be the maximum amount you are allowed to borrowed, corresponding to an Adjusted LTV of 100%. If the value of your collateral changes and your Adjusted LTV goes above 100%, your position will start to get liquidated to get back to a safe level and protect system solvency.
Custom Liquidation Preferences: When using multiple collateral types inside a Credit Account, users can define their own liquidation preferences, which are rules applied when a Liquidation is processed. Taking the above example, the user can specify that he wants all his DOGE to be liquidated first before his BTC can be touched.
Variable Interest Rate: Borrowers are charged variable interest rates based on the utilization rate, which is a function of supply and demand for a given asset (utilization = total_borrowed / total_supplied). The interest rate curve (available in the UI for each market) typically starts at 3% borrowing APR when utilization rate is 0%, and increases linearly toward 10% APR when utilization rate reaches 80%. Beyond that point, the borrowing APR increases sharply towards 200% when utilization rate reaches 100%. This dynamic incentivizes new suppliers when markets are hot and encourages borrowers to unwind their positions.
Liquidations Powered by RUJI Liquidations: If a debt position exceeds its safe Adjusted LTV limit (either because of the value of the collateral dropping, or the value of the debt increasing due to interests), a portion of the collateral becomes available for liquidation to bring the position back to a safe level. The at-risk collateral can be acquired at a discount to market value via Rujira's Liquidations platform, using a Dutch auction to determine the discount.
Collateral Swap: Borrowers are able to swap their collateral from one token to another without needing to repay their loan. For example, if you borrowed USDC using BTC as collateral, you can swap your BTC for ETH directly, without repaying the loan first.
Benefits
Low-Risk Return: Earn interest on your crypto assets by lending them out with a fairly low repayment risk (overcollateralized loans) and no exposure to Impermanent Loss (single-sided deposit, as opposed to deposits in the AMM pools which comprise two assets and are subject to IL risk).
Permissionless Borrowing: Easily take a loan against your crypto assets, whether it is to speculate on the markets, or to pay for real-life expenses.
Native Assets Support: Earn interest or borrow against all native assets connected to THORChain (including BTC, ETH, XRP, BCH, LTC, DOGE, etc.), no need for bridged or wrapped version.
Fair Liquidations: In case of adverse price movements for borrowers, liquidations are handled by Rujira's Liquidations platform which allows everyone to bid on at-risk collateral via a Dutch auction mechanism. This creates a competitive market for liquidations, which tend to result in lower liquidation penalties for borrowers vs. traditional money markets where the liquidation discount is fixed.
Stay in Control: With custom liquidation preferences, borrowers can defined in which order their assets should be liquidated in case of adverse price movements. For example, this allows to preserve their BTC as last ressort collateral, as opposed to most borrowing platforms that would liquidate your most valuable collateral first.
Efficient Integration: Fully integrated into Rujira's product suite, RUJI Lending enables leverage features in core apps such as spot margin trading on RUJI Trade and leveraged market making on RUJI Pools. This leads to increased borrowing volumes, increased liquidity on the orderbook DEX, higher spot trading volumes and more liquidation opportunities.
Intuitive UX: Simplifies the process of lending and borrowing assets.
Fees & Fee Sharing with THORChain Base Layer
Borrowers are charged an interest rate (borrowing APR) which is updated each block based on the utilization rate of the borrowed asset compared to the total supply available for lending.
90% of the interest charged goes to lenders and 10% is kept as protocol revenue, which is shared 50/50 with THORChain Base Layer.
Status
Last updated