Lender Risks

Bad Debt

Risk: If the liquidator bot fails to clear the liquidation in time during a period of high market volatility, the debt risk may arise from the underwater position.

Mitigation: We have adopted a cautious approach when setting key parameters to ensure a large buffer space. Therefore, we believe that this risk risk scenario is extremely unlikely to occur.

Timing of Asset Return

Risk: If the utilization rate of the pool is high, the time to get back the deposited assets will be delayed. Please note that farmers can borrow funds as long as they like, and there is no fixed term for when the funds must be returned. Mitigation: We use a triple-slope interest rate to optimize the capital utilization rate of 90%. When the utilization is beyond 90% (borrowing interest scaling from 20% to 150%), the sharply rising interest rates will incentivize more lenders to deposit funds, and borrowers to return outstanding loans, thereby optimizing the pool to stay at a flexible level below 90%.