Core Concepts

Depositing & Borrowing

• Depositor: Deposits BUSD to earn fixed interest.
• Borrower: Stakes BTC as collateral to borrow BUSD, allowing users to flexibly increase capital utilization without selling their BTC. This mechanism is executed transparently on-chain, ensuring the security of funds for both parties.

Collateral

• Borrowers must pledge sufficient assets (BTC) to borrow BUSD.
• Purpose: To safeguard depositor funds. If the borrower defaults, the collateral will be liquidated to repay the loan.

What is LTV (Loan-to-Value Ratio)?

• When this ratio exceeds the liquidation threshold, the borrowing order faces a risk of liquidation.

Matching Cycle

Matching Core Logic

1. Priority Rules
   1. Renewal deposit/borrow orders are prioritized for matching and sorted in chronological order of their original creation time (the earlier the order was created, the sooner it will be processed).
   2. New orders are sorted by their submission time within the current cycle.
2. Key Principles
   1. Borrow orders must be matched completely (no partial borrowing allowed). Deposit orders allow partial matching.
   2. If renewal fails to match, the order immediately expires, requiring repayment; otherwise, liquidation is triggered.
      • Reasons for renewal failure include, but are not limited to:
        • The order has already entered the liquidation process.
        • Fewer market investors are available; currently, renewal is only supported when matched with new deposit orders.

Matching Process

1. The initial maximum borrowable amount for the day is the total amount of deposit orders that enter the matching process on that day.
2. Prioritize the matching of borrowing orders, starting from the earliest order:
   1. If (Total Borrowed Amount Already Matched Today + Current Borrowing Order Amount) > Maximum Borrowable Amount Today, then the current order matching fails, and the borrowing matching terminates. The total borrowed amount for the day is the total amount that has been successfully matched so far.
   2. If (Total Borrowed Amount Already Matched Today + Current Borrowing Order Amount) <= Maximum Borrowable Amount Today, then the current order is matched successfully. Simultaneously, Total Borrowed Amount Today += Current Order Borrowing Amount. Proceed to match the next order.
3. Deposit Order Matching:
   1. If (Total Matched Deposits Today + Current Deposit Order Amount) > Total Borrowed Amount Today, then the current order is partially matched; Matched Amount = Total Borrowed Amount Today - Total Matched Deposit Amount; Matching terminates.
   2. If (Total Matched Deposits Today + Current Deposit Order Amount) < Total Borrowed Amount Today, then the current order is fully matched successfully; Total Matched Deposits Today += Current Deposit Order Amount, then proceed to match the next deposit order.
   

Matching Result Processing

1. Matched Orders:
   1. New Borrowing/Deposit Order: Generate new borrowing/deposit orders. The principal is user-set, and the interest rate is the locked rate.
   2. Renewal orders generate renewal orders. The loan principal is the user's initial setting ➖ early repayment part. The deposit principal is the user's initial setting. The current interest rate is the locked interest rate, and the interest is the sum of historical interest ➖ repaid interest.
2. Unmatched Orders:
   1. New Borrowing/Deposit: Returned to pre-deposit status, available for matching in the next cycle.
   2. Renewal Deposit Orders: Returned to pre-deposit status, available for matching in the next cycle. While in pre-deposit status, users can withdraw.
   3. Renewal Borrowing Orders: The order expires. The user must repay; failure to repay on time results in the disposal of collateral.

Post-Cycle Process

1. Interest Rate Locked: All matched orders retain a fixed interest rate for the duration of the cycle.
2. LTV Monitoring: Real-time monitoring of Loan-to-Value (LTV) ratios. If LTV exceeds the threshold, a liquidation warning is triggered.
3. Expiration & Liquidation:
   1. Borrower repays on time → Reclaims collateral.
   2. Failure to repay on time → Automatic auction of collateral to repay the loan.