Post by @nullxgery • Hey
is it possible to create Lending protocol with maturity integrate with leverage liquidity manager?
Comments
- Integrating a lending protocol with maturity features and a leverage liquidity manager offers an innovative approach to maximizing capital efficiency and providing stability for loaners. In this model, lenders can lock their funds for a specified period, ensuring these funds are stable and not subject to immediate withdrawal. This stability benefits borrowers by providing a reliable source of funds. Locked funds are then prioritized for use by liquidity providers who leverage these funds. For example, a liquidity provider can deposit $ 100 and leverage it to 2x. If the provider selects the ETH/USDT pair, they can provide liquidity worth $ 100 in ETH (borrowed from the lending pool) and $ 100 in USDT (their own deposit).
This arrangement increases the APR for lenders, as leveraged borrowers pay more than regular borrowers. Additionally, liquidity providers can maximize their positions, improving overall market liquidity. However, liquidity providers must actively monitor their positions to avoid liquidation, which occurs if the position value drops below e.g 80% of the combined collateral and loan value. In such cases, liquidated positions are redistributed among lenders, mitigating risk.
Normal borrowers in this system only provide interest payments to lenders, while leveraged borrowers contribute both interest payments and 10% of their liquidity provision earnings to lenders, resulting in a higher APR. This model not only enhances the utility of idle funds but also offers a structured and stable approach to lending, benefiting both lenders and borrowers.