Protocol

Capital Reservation Ratio and Compound Ratio

For current available digital assets on compound protocol (Ether, USD Coin, Augur, Dai, Sai, Wrapped BTC, Ox, Basic Attention Token), as there is cToken available, this enable DeFiner to supply/withdraw assets to compound to improve utilization rate of DeFiner.

DeFiner auto supplies loan currency to “Compound Network” when capital reserve ratio (R) increase to a certain level, and auto withdrawes loan currency from “Compound Network” when capital reservation ratio (R) drops to a range between 0 and 10. Here are the definitions of Capital Utilization Rate (U ), Capital Compound Ratio (C) and Capital reserve ratio (R).

  1. Capital Utilization Rate (U )= total loan outstanding / Total market deposit.

  2. Capital Compound Ratio C = total capital in Compound / Total market deposit.

  3. Capital reserve ratio (R) = 1 - U - C.

DeFiner always keeps the R between 10 and 20. When R > 20, it should signal Savings Pool Smart Contract to deposit to compound, which increases the value of C and reduce remaining reserve fund to 15% of total value. When R < 10, it should signal Savings Pool Smart Contract to withdraw from compound, which decreases the value of C and increase remaining reserve fund to 15% of total value. (This 10-20 range is globally configurable.)

Rate

Definer Borrow APR = Compound Supply Rate * 0.4 + Compound Borrow Rate * 0.6

DeFiner Deposit APR = DeFiner Borrow APR * U + Compound Supply Rate * C

Liquidation

Define LTV be the loan to collateral value in DeFiner. The initial LTV ratio is predefined value by DeFiner as 60%.

When the LTV value raises to 85%, liquidation will be triggered and 3rd party can swap the collateral at a discounted liquidation price. The liquidation discount ratio is a predefined value by DeFiner, right now is 5%,

Liquidation index is used in DeFiner to prioritize the liquidation sequence of users’ collateral, it majorly decided by the liquidity of the collateral market, the more liquid the market is, the higher priority the collateral is to be liquidated. ETH>USDT>DAI>USDC>GUSD; When we started to introduce more assets, it will be assessed and added to the index between ETH and Stablecoins.