Fixed-Rate Lending Proposal

Hey guys, it’s been a long while since the last new function was introduced to Wing. Though you may suffer from the PolyNetwork Hack, it’s time to think about launching something new! Here comes my proposal about Fixed-rate Lending.

Why should Wing have it?
In the current DeFi lending market, mainstream protocols like Aave, Compound etc. mainly adopt dynamic interest rate solutions: their lending rates are dynamically based on the utilization rate of the funds, and their interest rate can vary dozens of times. Although dynamic interest rates reflect market supply and demand in real time, fluctuations in interest rates may lead to uncertainty in borrowing costs. A fixed rate means that the interest rate remains the same throughout the loan period. This gives borrowers a more stable repayment schedule as they can predict and plan for future repayments, allowing them to better manage risk and budget.

The idea is to use an over-collateralization approach that allows borrowers to issue bonds, set their own borrowing rates, and avoid collateral liquidation before the loan maturity date. The process is divided into three parts: bond issuance, bond sale and bond redemption.

Bond Issuance
Bonds are issued using an over-collateralization method. Users recharge collateral tokens (such as USDT, USDC, ETH) into the bond contract. Based on the value of the collateral, the contract calculates the number of bond tokens that the user can issue with the corresponding amount. Corresponding bond tokens (such as Bond-WING). Bond tokens have an expiration date. On the expiration date, bond holders can redeem them 1:1 to obtain the underlying token (such as WING) corresponding to the bond, or take away the collateral tokens of the bond issuing user.

Bond Sales
After receiving the issued bonds, users can set a certain discount price based on the borrowing interest rate they want, sell them, and obtain the tokens they need to borrow (such as WING). Users who hold WING can sell their WING to obtain Bond-WING. And redeem it on the maturity date to obtain the principal and income.

Bond Redemption
On the maturity date, bond issuing users must deposit the bond’s local currency into the contract in order to get back the collateral. Bond holders can destroy the corresponding bonds to obtain principal and income. If the value of the collateral becomes low and the bond issuer has no incentive to deposit the local currency of the bond, the collateral will be allocated to the bond holder.

The fixed-rate function is a relatively stable product at least to me. And I’m looking forward to seeking your ideas about it!

Nice update. Go ahead Wing 2.0

1 Like

when it update ?

and what is the next step of it?