Lending

Alloc8's lending functions as a pool where lenders deposit their assets on the Lending page which borrowers can utilize after posting collateral to ensure lender safety. Lending on Alloc8 is passive, there is no need for active management & there is no impermanent loss. In addition, all Lenders will get all Alloc8 points distributed back to them, 10 % of whatever points the protocol makes from the vaults and a variable apy based on the utilization of the liquidity in the pool.

Alloc8 uses Erc4626 tokens to provide lenders with proof of their stake in our pools. These tokens can be redeemed at any time for the original assets unless the utilization of the pool becomes higher than the liquidity that the lender needs to withdraw.

Before borrowing on Alloc8 from Lenders, Borrowers must collateralize their selected asset to in order to borrow. This collateralization process provides security for lenders because collateral can be liquidated to repay lenders. Collateralization ratios may vary depending on the borrowing activity and risk parameters defined by the platform.

What Borrowers can do with Lended assets?

Borrowers are allowed to borrow against their collateral amount. Borrowed assets are deposited into a Safe(credit Account) which can only interact with the vaults present on our platform. Having separate credit accounts for each asset allows Alloc8 to quickly and aptly liquidate the credit accounts as and when required.

Interest Rate

All open borrows on Alloc8 pay a lending rate (APR) back to the lending liquidity pool. This APR fee is distributed pro-rata to all lenders. The interest rate model closely follows models in other popular lending protocols. As the utilization of liquidity in the pool increases, the rate increases as well. The rate of increase also increases as utilization increases. Learn more below