FAQ

How to calculate NET APY 🆕

Net APY which is shown on the dashboard page, now we explain how to calculate this value.

  1. APY with positive value means APY over your supplying balance.

  2. APY with negative value means APY over your borrowing balance.

For example, account A has Net APY value 33%, the formula to calculate it is: 

SYI is supplyInterestPerYear;
BYI is borrowInterestPerYear;
SDYI is supply Distribution interest per year;
BDYI is borrow Distribution interest per year;

NetInterest = sum(SYI+SDYI+BDYI-BYI)/SUPPLY_BALANCE

Account B has Net APY value -20%, the formula is:

SYI is supplyInterestPerYear;
BYI is borrowInterestPerYear;
SDYI is supply Distribution interest per year;
BDYI is borrow Distribution interest per year;

NetInterest = sum(SYI+SDYI+BDYI-BYI)/BORROW_BALANCE

What is Collateral Factor

Collateral Factor is the percentage of assets that can be used as collateral. Assumption: Deposit a currency A worth 100 USD in the supply market, and the collateral factor of A is set to 75%, then the amount of collateral assets that can be used for borrowing is 100x75%=75 USD.

What is Reserve Factor

The Reserve Factor is the percentage of interest reserved by the platform as income. This value is adjustable as collateral factor. It will be centrally controlled and adjusted by the Lendland Team at the initial stage. It can be modified through the proposal by governance;

For example, the reserve factor of USDT market is 7%, the 7% of the interest from borrowing will be reserved, the other 93% will be the interest of all suppliers in the market.

The process of liquidation

Liquidation refers to the process in which other accounts assist in repayment when the amount of assets included in the collateral is less than the amount of total borrowing assets, and obtains the collateral of the liquidated account as a reward. For example, currency A has a collateral factor of 75%. Suppose the current price is $10, and 100A's assets are supplied, so you get the collateral amount in USD.

At this time, currency can be borrowed at 80% of the mortgage amount (⚠️Note: 80% here is the upper limit of the scope of protection set by the app to protect user assets), the upper limit of lending = 750 x 0.8 = $600; if currency B's price is $6, then you can borrow 100 B.

After a period of time, assuming that the price of A remains unchanged and the price of B rises to US$7.5, your total borrowings rise to US$750. If the price of B continues to rise, liquidation will be triggered.

During liquidation, the liquidation program will first liquidate some assets according to the liquidation ratio set in the contract. For example, if the liquidation ratio is 20%, then your 20 B assets will be liquidated. The liquidation program will help you repay 20B, but in return, you The 20B equivalent of A assets will be issued to the liquidation account at a fixed preferential rate, which is about 8%;

Since your borrowings are not the sum of all your collateral, liquidating a part of it can bring the borrow limit of your account down to a normal level. If the price continues to rise, the liquidation will continue with the above process.

Note: Liquidation is a contract method. The contract will perform checks before the liquidation is executed. If the liquidation conditions are not met during execution, the liquidation call will revert.

Did the liquidation happen instantaneously?

No.

First of all, Lendland has set a protection range of 20%, and users can start to reduce the number of borrowed assets or increase the amount of collateral assets after the utilization rate of collateral assets exceeds 80%. Price Oracle will adopt a time-weighted average method for updated prices to avoid sudden liquidation problems caused by excessive price fluctuations. Therefore, triggering liquidation is a process, and it will not be liquidated immediately because of a sudden price increase.

At the same time, keeping your borrow limit no more than 80% can well avoid the occurrence of liquidation. If you are worried about this, you can reduce the loan ratio to 60% or less.

Can a third party perform liquidation?

YES. Any third party can perform liquidation. Liquidation method: https://github.com/LendLand/LendLand/blob/master/CErc20.sol

#line 107
function liquidateBorrow(address borrower, uint repayAmount, CTokenInterface cTokenCollateral) external returns (uint)

It is necessary to determine in advance whether the account can be liquidated. Any liquidation that has not reached the liquidation line cannot be liquidated. The judgment process is described as follows:

  1. Scan the Lendland transactions on the chain, list the account's all transactions, and record the deposit and borrowing status;

  2. Synchronize the prices of various assets through the price oracle contract;

  3. Calculate locally the accounts who are about to meet the liquidation conditions, and then call the contract: Query whether the account has reached the liquidation line

  4. function getAccountLiquidity(address account) public view returns (uint, uint, uint)

    If the shortfall value returned by this function is greater than 0, it means that the liquidation threshold has been exceeded. At this time, liquidation can be executed by calling the liquidation method of the contract.

Why can't the RNA market be fully repaid or redeemed?

RNA is a special market, and it is not possible to use the method of redeeming all deposits/repaying all borrowings set by the contract. Therefore, if you need to redeem all deposits/repay all borrowings, you need to do 1-2 more times;

What are the interest rate models in the market?

  1. Polyline model: interest rate changes at 80%

  1. Normal model: interest rates rise smoothly

LEND liquidity mining reward rules

First of all, both supply and borrow markets can get LEND distribution rewards.

Lendland’s reward is different from Novaswap. We set a distribution rate according to the size of the reward pool, assuming it is R/block which means R LEND will be issued per block;

For the borrow and supply markets, we divide R into 2 and the supply/borrow market will get R/2 LEND each;

LEND will be distributed according to the proportion of borrow market.

Therefore, we assume that the liquidity of the USDT borrow market is 25% to the all borrow markets. For the USDT borrow market, each block will reward R/8 LEND/block At this point, if Alice borrowed in the USDT borrow market for 1% of the total assets, then she will receive R/800 LEND/block. As the block is produced, Alice's account will continue to accumulate LEND.

The above is the principle of LEND liquidity mining. As prices update, deposit, redeem, borrow, and repay operations affect the size of the supply and borrow market, the issued rate of each market is constantly changing.

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