- Background and Context
In the current lending pool, there is an interest rate difference between the Suppliers and the Borrowers. Because supplied amounts are much larger than borrowed amounts, and the interest generated by borrowers is evenly distributed to all suppliers. The purpose of launching a Peer-to-Peer pool is to solve this mismatch of assets, it will match the borrowers and suppliers. When no Peer-to-Peer pairing is formed, the funds will be deposited in the ordinary lending pool to enjoy normal supply APR. When the funds are paired, it will be withdrawn to the Peer-to-Peer pool. Then the Supply APR of the suppliers increases, and the Borrow APR of the borrowers decreases, so that both sides can obtain the optimal solution.
- Pool Mechanism
The Peer-to-Peer Pool is built on the ordinary lending pool(Compound). When the user supplies assets in the Peer-to-Peer pool, the funds will be deposited into the ordinary lending pool through the Peer-to-Peer pool and enjoy the APR in the ordinary lending pool. It means that the supplier can enjoy the supply APR of the ordinary lending pool if not paired.
When a borrower participates in the Peer-to-Peer pool, the assets supplied by the supplier into the ordinary lending pool through the Peer-to-Peer pool will be withdrawn and paired with the borrowing assets. At this time, since the capital utilization rate of both sides is 100%, the supplier and the borrower can enjoy more favorable interest rates. Suppliers will get higher interest rates and borrowers will get lower loan interest rates.
Now the ordinary lending pool is Compound V2 (https://v2-app.compound.finance/)
2.1 Interest Rate Model
Peer-to-Peer Lending APR= a*Borrow APR +(1-a)*Supply APR
a is a set constant in the range [0,1]
Supply APR: the Supply APR of the token corresponding to the common lending pool
Borrow APR: The Borrow APR of the token corresponding to the common lending pool
By setting the value of a, we can adjust the degree of attraction of the Peer-to-Peer pool to the Suppliers and the Borrowers in the underlying pool. A actually represents the proportion of benefits obtained by both borrowers and lenders. In the initial stage, a can be set to 50%, which can be dynamically adjusted later according to market conditions. Such as increasing the value of a to attract suppliers, so as to reduce the risk of contract liquidation.
Only users who have completed paired lending in Peer-to-Peer pool will enjoy the preferential Peer-to-Peer interest rate.
2.2 Initial Assets Supported:
ETH, COMP, DAI, USDC, USDT for supplying and borrowing.
Asset Collateral Factors:
ETH (82.5%), COMP (65%), DAI (83.5%), USDC (85.5%), USDT (0)
2.4 Lending process
The asset supplied by the user in the Peer-to-Peer pool will be deposited in the ordinary lending pool to enjoy the interests. But when a user borrows that asset, they are paired, the supply asset will be withdrawn to the Peer-to-Peer pool. Then the Supply APR of the suppliers increases.
Note: If you click the Collateral button after Supply and want to use the Supply assets as collateral for borrowing, then Supply assets will be withdrawn from the Peer-to-Peer Pool and cannot enjoy the Peer-to-Peer supply interest rate, but can only enjoy the ordinary lending pool supply rate.
Borrowers need to collateralize assets for borrowing. When a borrower enters the Peer-to-Peer pool to borrow some asset, it will be paired with the same supply asset, and after paired, the borrower will enjoy the Peer-to-Peer borrow interest rate.
2.5 Token Incentives
It should be noted that when the borrower and the supplier complete the loan at the Peer-to-Peer layer, there is no lending exposure at the ordinary lending pool layer, so they cannot obtain token distribution incentives. Therefore, for both borrowers and suppliers,when the reward from ordinary pool is higher than that of peer to peer, Peer-to-Peer lending mechanism will not be used for matching.
When the user’s funds are in the ordinary lending pool, there are only COMP incentives.
When the user’s funds complete the Peer-to-Peer match, there are only pWING incentives.
2.6 WING Distribution
Currently the WING asset is generated at the rate of 0.04 WING/sec, and burnt at 0.016 WING/sec. So daily WING incentives are 0.024∗60∗60∗24=2,073.6 WING/day. First, the WING incentives will be distributed to each pool according to the valid borrow amount of each pool. On the initial launch day of Wing Peer-to-Peer Pool, 10% of the total valid borrowed amount of the Ontology Flash Pool, the Ethereum Flash Pool, the OEC Flash Pool, the BNB Chain Flash Pool, the Ontology EVM Flash Pool, and Wing NFT Pool will be used as an initial estimated borrowed amount. The distribution cycle of Wing Peer-to-Peer Pool will be per block, the amount of WING distribution for each block will be adjusted according to the block generation rate.
The pWING incentives in the Peer-to-Peer pool are exclusively shared by the users who have completed the Peer-to-Peer pairs.
Then, the pWING incentives in Wing Peer-to-Peer Pool will be allocated 50% to supply, 50% to borrow.
WING should be swapped to pWING, and then distributed on the Wing Peer-to-Peer Pool. To reduce transaction costs, the Wing Team will swap WING to pWING in advance which will be sufficient for several days’ distribution. For the initial launch, 5,000 WING will be swapped to pWING. The 5,000 WING will come from the unallocated 15,000 WING from the WING’s distribution rate adjustment in the initial stages of Wing.
The same as Compound V2. Compound V2 does not have a front-end liquidation market, so liquidators need to liquidate at the contract level once the borrow limit is up to 100%. The liquidator can liquidate up to 90% of the collateral in a single liquidation, and the minimum liquidation is 5%.
2.8 Proposals & Votes:
Only WING tokens will be eligible for initiating proposals or voting. To participate, pWING needs to be swapped back to WING.
Feel free to have your say!