⚖️Lending Mechanism

Liquidity Provision and Asset Collateralization

• Liquidity Providers:

  • Users can deposit their assets into the Portal Finance liquidity pool to become Liquidity Providers (LPs) and earn interest proportional to the amount of assets they provide.

  • The value of LP assets is determined in real-time through oracles on the SOON.

• Asset Collateralization:

  • Borrowers can use supported digital assets as collateral to borrow other assets within the platform.

Interest Rate Curve Structure

Kink Point Model: Utilizes a piecewise linear interest rate curve, comprising:

• Low Utilization Range (0%-Kink Point): Features lower interest rates to incentivize depositors to provide liquidity.

• High Utilization Range (Post-Kink Point): Displays sharply rising interest rates to discourage borrowing and attract more liquidity from depositors.

when $U≤U_{kink}$

$R_b=R_{base} +(R_{kink}-R_{base})\times \frac{U}{U{kink}}$

when $U>U_{kink}$

$R_b=R_{kink} +(R_{max}-R_{kink})\times \frac{U-U{kink}}{1-U{kink}}$

• $R_{base}$​: Basic borrowing interest rate, the interest rate when the utilization rate is 0

• $R_{kink}$: Borrowing interest rate at Kink point

• $R_{max}$: Maximum borrowing rate

• $U_{kink}$​: Utilization Kink point location

• $U$: Current utilization, defined as $U=\frac{\text{Borrowing amount}}{{\text{total liquidity}}}$

Asset	U_kink	R_0	R_kink	R_max
ETH	80%	0%	12%	35%
SOL	80%	0%	12%	35%
USDC	80%	0%	15%	40%
USDT	80%	0%	15%	40%

Deposit Rate Formula

$R_d=R_b\times U$

• $R_d$​: Lending interest

• $R_b$​: Borrowing interest

• $U$: Utilization