Lending
Borrow USDC against your RWA tokens or lend USDC to earn interest. Our lending protocol enables capital efficiency while maintaining exposure to luxury assets.
Overview
The lending market provides:
- For Borrowers: Access liquidity without selling tokens
- For Lenders: Earn interest on idle USDC
- Low LTV: Conservative 40-60% loan-to-value ratios
- Auto-Liquidation: Protect lenders from bad debt
How It Works
Borrowing Flow
// Step 1: Deposit collateral
depositCollateral({
token: FP_JOURNE_TOKEN,
amount: 100, // 1 full watch worth ~$150k
});
// Step 2: Borrow USDC
borrow({
collateral: FP_JOURNE_TOKEN,
borrowAmount: 60000, // 40% LTV
duration: 90days,
});
// Step 3: Repay + interest
repay({
loanId: "0x123...",
amount: 60000 + interest,
});
// Step 4: Withdraw collateral
withdrawCollateral({
token: FP_JOURNE_TOKEN,
amount: 100,
});
Lending Flow
// Supply USDC to earn interest
supply({
asset: USDC,
amount: 100000, // $100k
});
// Earn interest automatically
// Current APR: 8-12% based on utilization
// Withdraw anytime (if liquidity available)
withdraw({
asset: USDC,
amount: 110000, // Principal + interest
});
Interest Rates
Dynamic Rate Model
Interest rates adjust based on utilization:
utilizationRate = totalBorrowed / totalSupplied
if (utilization < 80%) {
baseRate = 5%
borrowAPR = baseRate + (utilization × 10%)
} else {
// Kink model - steeper curve above 80%
borrowAPR = 13% + ((utilization - 80%) × 50%)
}
Example Rates:
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 20% | 7% | 5.6% (80% to lenders) |
| 50% | 10% | 8% |
| 80% | 13% | 10.4% |
| 90% | 18% | 14.4% |
| 95% | 20.5% | 16.4% |
Fee Structure
- Borrower pays: Full interest rate
- Lender receives: 80% of interest
- Protocol takes: 20% as treasury fee
Collateral Types
Accepted Collateral
| Asset Category | LTV | Liquidation Threshold | Interest Rate |
|---|---|---|---|
| Tier 1 RWA (High Value) | 40% | 50% | Base rate |
| Tier 2 RWA (Mid Value) | 50% | 60% | Base rate + 1% |
| Tier 3 RWA (Standard) | 60% | 70% | Base rate + 2% |
LTV Examples
Conservative (40% LTV):
Collateral: 100 RWA_TOKEN @ $1,500 = $150,000
Max Borrow: $60,000 USDC
Liquidation: If value drops to $120,000 (50% threshold)
Moderate (50% LTV):
Collateral: 100 RWA_TOKEN @ $3,000 = $300,000
Max Borrow: $150,000 USDC
Liquidation: If value drops to $250,000 (60% threshold)
Aggressive (60% LTV):
Collateral: 100 RWA_TOKEN @ $2,500 = $250,000
Max Borrow: $150,000 USDC
Liquidation: If value drops to $214,286 (70% threshold)
Liquidation Mechanism
When Liquidation Occurs
Your position gets liquidated when:
currentValue / borrowedAmount < liquidationThreshold
Example:
Borrowed: $60,000
Liquidation Threshold: 50%
Collateral Value: $150,000 → SAFE
Collateral Value: $119,000 → LIQUIDATION
Liquidation Process
- Bot Detection: Liquidation bots monitor all positions
- Liquidation Call: Bot repays debt + penalty
- Collateral Seized: Bot receives collateral at 5% discount
- Profit to Liquidator: 5% premium on seized assets
Example:
Original Loan:
- Borrowed: $60,000 USDC
- Collateral: 100 RWA_TOKEN worth $150k
Price drops to $1,190 per token:
- Collateral value: $119,000
- Liquidation triggered
Liquidator:
- Repays: $60,000 + $300 penalty = $60,300
- Receives: 50.63 tokens (worth $60,300 / 0.95)
- Profit: ~$3,000 (5% discount)
Original Borrower:
- Loses: 50.63 tokens
- Keeps: 49.37 tokens + $60,000 USDC borrowed
Use Cases
Use Case 1: Tax-Efficient Liquidity
Scenario: You own RWA tokens worth $150k but need $60k cash
Traditional Approach:
- Sell tokens for $60k
- Pay capital gains tax: ~$12k (20%)
- Net: $48k after tax
Lending Approach:
- Collateralize your tokens
- Borrow $60k at 10% APR
- Annual interest: $6k
- No tax event
- Keep full exposure to price appreciation
Use Case 2: Leverage Long Position
Scenario: Bullish on luxury asset, want more exposure
Strategy:
Starting: 100 RWA_TOKEN worth $150k
Step 1: Borrow $60k against tokens
Step 2: Buy 40 more tokens with borrowed USDC
Step 3: Total exposure: 140 tokens (1.4x leverage)
If price +20%:
- 140 tokens now worth $252k
- Profit: $102k - $60k debt - $6k interest = $36k
- Return: 24% vs 20% without leverage
If price -20%:
- 140 tokens now worth $168k
- Must repay $60k debt
- Remaining: $108k worth of tokens
- Loss: $42k (28% vs 20% without leverage)
Use Case 3: Yield Farming
Scenario: Stack lending yield on top of vault staking
Strategy:
Capital: $100k USDC
Step 1: Supply $100k to lending market (10% APR)
Step 2: Receive lending tokens
Step 3: Stake lending tokens in vault (15% APR)
Step 4: Total APR: 10% + 15% = 25% compounded
Annual Return: ~$28k on $100k
Risk Management
For Borrowers
Health Factor:
healthFactor = (collateralValue × liquidationThreshold) / borrowedAmount
Safe: > 1.5
Warning: 1.2 - 1.5
Danger: 1.0 - 1.2
Liquidation: < 1.0
Managing Risk:
- Monitor health factor daily
- Add collateral if approaching liquidation
- Repay debt to improve health factor
- Set up alerts for price drops
For Lenders
Liquidity Risk:
- Can't withdraw if utilization = 100%
- May need to wait for repayments
- Mitigate: Supply in tranches
Bad Debt Risk:
- If liquidations fail, lenders bear loss
- Insurance fund covers first $1M
- Historical bad debt: Less than 0.01% of TVL
Advanced Features
Flash Loans
Borrow any amount with zero collateral if repaid in same transaction:
flashLoan({
asset: USDC,
amount: 1000000, // $1M
callback: arbitrageFunction,
fee: 0.09% // $900 fee
});
Use Cases:
- Arbitrage between markets
- Liquidate underwater positions
- Refinance debt across protocols
Interest Rate Swaps
Fix your rate or speculate on rate movements:
// Borrower: Lock in current rate
fixedRateSwap({
notional: 100000,
fixedRate: 10%,
duration: 1year,
side: PAY_FIXED
});
// Lender: Speculate on rising rates
fixedRateSwap({
notional: 100000,
fixedRate: 10%,
duration: 1year,
side: RECEIVE_FIXED
});
Cross-Collateral
Use multiple asset types as collateral:
Collateral Mix:
- 50 Tier 1 RWA_TOKEN @ $1,500 = $75k (40% LTV)
- 20 Tier 2 RWA_TOKEN @ $3,000 = $60k (50% LTV)
Max Borrow:
- Tier 1 portion: $30k
- Tier 2 portion: $30k
- Total: $60k USDC
Market Statistics (Mock)
Current Metrics
Supply Side:
Total USDC Supplied: $25M
Active Lenders: 1,247
Average Supply: $20k
Supply APR Range: 8-14%
Borrow Side:
Total USDC Borrowed: $18M
Active Borrowers: 423
Average Loan Size: $42k
Borrow APR Range: 10-18%
Utilization: 72%
Top Collateral Types
| Collateral Type | TVL | Borrowed Against | Avg LTV |
|---|---|---|---|
| Tier 1 RWA Tokens | $12M | $4.8M | 40% |
| Tier 2 RWA Tokens | $8M | $4M | 50% |
| Tier 3 RWA Tokens | $6M | $3.6M | 60% |
Fees Summary
| Action | Fee | Notes |
|---|---|---|
| Supply USDC | 0% | Free to lend |
| Borrow USDC | Variable APR | Based on utilization |
| Repay Loan | 0% | No early repayment fee |
| Liquidation Penalty | 5% | To incentivize liquidators |
| Flash Loan | 0.09% | Per transaction |
Next Steps
- Borrowing Guide: Learn how to borrow against RWA tokens
- Lending Guide: Discover how to earn lending yield
- Liquidation Calculator: Calculate your health factor and monitor risk