WIP-13 IF Pool mechanism proposal (Yes)

Discussion
1

We propose the launch of IF Pool, the product pool based on the OScore credit evaluation system.

Loan Products

  • IF Pool includes a supply pool, a collateral & borrow pool and an insurance pool as well.

  • Supply & borrow assets include USDT / USDC / DAI

  • Collateral assets include USDT / USDC / DAI

  • Insurance pool assets include USDT / USDC / DAI

Rules on Loaning:

  • The supply pool has a total limit of 500,000 USDT. The 500,000 USDT is available for all users to borrow;

  • A user can borrow 20 USDT – 1,000 USDT, and can only borrow again after full repayment;

  • A user can borrow one time on a natural day. The highest amount a user can loan in one day is rounded down from the user’s borrow limit;

  • A user needs to collateralize a certain amount every time a loan is made. The basic Loan-to-Value (LTV) ratio (Collateral Factor) is 1.1. Collaterals are evaluated based on the real-time USDT value when making the loan;

  • The interest rate per day is 0.05%, with a term of 7 days. The loan can be repaid in advance.

  • The insurance pool will be locked for 3 days. The default settlement ratio of the insurance pool is 60% (of the default exposure).

Credit-based Risk Control Mechanism

Borrowers will be categorized to the following types:

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The following info will be attained from off-chain data to determine which type the user belongs.

  • Whether the user has completed real-name authentication (KYC)

  • Whether the user appears on the OScore defaulters’ list

  • Certification of OScore

Breach of Contract:

  • A grace period of 1 day is granted to the borrower. Repaying within the grace period will not be counted as a default. The interest rate during the grace period is 0.08%;

  • Borrowers who default will be listed on OScore defaulters’ list, with the defaulters’ private information under protection;

  • If the borrower repays the default amount and penalty interest to the Wing DAO community fund pool after defaulting, the user will be removed from the defaulters’ list after a week. The penalty interest rate is 0.1% and is not compounded;

  • The defaulters’ list will be automatically cleared after three years.

Liquidation and Compensation from the Insurance Pool

  • If the borrower misses payments, the digital assets collateralized by the borrower will be liquidated at real-time quotes;

  • Upon liquidation, the WINGs incentives yet to be distributed to the borrower will be first liquidated to the lender at real-time quotes;

  • 60% of default exposure after liquidation will be paid by the insurance pool funds (accounted in USDT). The remaining 40% will be shared by the supply pool.

WING Distribution

  • The WINGs to be distributed in the IF Pool will be released from the total distribution amount of WING, and will double the amount of USDT generated from loan interest;

  • WINGs will only be distributed to borrowers after they repay off. Borrowers who breached or who were in the grace period will not receive any WING.

  • The distribution ratios of WING to IF Pool:

      Supply pool: 40% 

  Borrow pool: 30%

  Insurance pool: 30%

Wing DAO Foundation

  • Wing DAO will authorize the initiators of the IF Pool to adjust the rules and parameters of IF Pool any time, and to postpone the operation of IF Pool or close the IF Pool when necessary.

  • Wing DAO fund pool will receive 15% of interests generated from the IF Pool as commission.

6 Likes
2

Since it’s a pioneer product in crypto world, it may not be that fancy as expected. We’re trying to make balance between innovation and risk. We’d like to make progress step by step and try to avoid major mistake which could causing failure. Feel free to leave your suggestion.

1 Like
3

I am concerned about this part. I don’t think supply pool should participate as insurance for default.

And if I’m reading this correctly you are saying that people would put up USD as collateral to borrow USD? Would this even be used, then?

4

Ken, if i understand it correctly we re talking about under collateralized loans

Ltv of 1.25 basically means this

https://www.investopedia.com/terms/1/125_loan.asp

So you deposit 800$ and loan 1000$

5

As Andrei said, we don’t want to mix to many things in IF pool to increase risk. One big risk is asset price fluctuation and we rule it out in the first version. It’s a simple under-collateralized-loans product.
We are trying to make profit and risk balance among supply, borrow and insurance. Since the insurance part never met a default in Flash pool. We didn’t have a chance to look into these parameters. We could set 100% of default exposure for insurance and a higher WING distribution ratio. Let’s see others’ opinion.

6

Thanks for the answer. Maybe I don’t understand some important detail, but why make them collateralize at all, then? Just give them the difference in money that’s essentially the sum of what they borrow-collateralize, if it’s all through stablecoins, anyway. I would think that we should allow BTC at the least, even in the initial phases, as our primary collateral.

7

Again, collateral asset lower the risk. Think about it: which is easier for scammer? Take $100 directly or collateral $900 first and borrow $1000 later

8

Maybe there can be space to integrate a Vesting structure that can be baked into the IF Pool mechanism? Kind of like @erickpinos proposal. There are some other good ideas on that thread as well. There could also be tiered stucture, I.E. 1week, 1mth, 3mths, 6mths, 1yr, … for vesting. I think this could be a good way to help mitigate risk overall and also provide more value to suppliers and insurers.

1 Like
10

I think that all integrations should be organically linked with wing coins. Do you have any opinion on the linkage for wing coin?

11

How about think IF pool in this way: it’s a creative and unique pool in DeFi which try to import credit into crypto world. If Wing succeeds doing this, the whole project will be benefit from it

12

The whole design seems good. But what I can expect is that there will be a trustless person come to borrow on purpose and not even willing to pay-back at all. The team should be authorized to close the pool if necessary or change the ratio to lower the risk.

13

Looking forward to a pool based on oscore

1 Like
14

I think the amount that each user can borrow is too low

15

Love it lets get this to voting :fist:t4::fist:t4::fist:t4:

17

The risk is also high. It’s better to start with little amount

18

From the perspective of capital utilization, this will be an unprecedented DeFi attempt.

19

This is indeed a leading idea, but I am very worried about the possible risks, so try to take it slowly

20

The vote is live. Check here.