Last updated
Last updated
Pool Token Types
Each fixed rate pool can hold a combination of two tokens: Fixed Rate Tokens and Loan Tokens. A market’s Loan Token is the yield bearing version of the market's Underlying Token. For example, a WETH collateral USDC debt market's Underlying Token would be USDC and the Loan Token would be the yield bearing USDC asset from the underlying money market. The use of a yield bearing asset as the Loan Token enables outstanding liquidity and pending limit orders to be yield bearing which improves the protocol’s capital efficiency.
Each fixed rate order book is made up of a set of discrete interest rate ticks. The set of ticks for a given pool are dictated by the market's tickSpacing and maxRate parameters. For example, if a pool's tickSpacing is 1% and the maxRate is 10% users can trade at the following rates:
Conceptually, borrowers and lenders can lend or borrow at one or a set of ticks. Ticks are discrete points, such that trades occur at precise interest rates. If a trade is entirely executed in a single tick, the user experiences no slippage.
Each tick can hold a balance of Loan Tokens (ex: cUSDC) and/or Fixed Rate Tokens.
In the example above users added liquidity in the form of Fixed Tokens (left) and Loan Tokens (right) in the orderbook. They did this either by setting limit orders in the pool or by LPing. LPing in a pool allows LP to accrue interest and fees over time in a similar fashion to LPing in Uniswap V3.
Fixed Tokens borrow orders express intents to borrow by selling Fixed Tokens for Loan Tokens, alternatively Loan Token lend orders express intents to lend by selling Loan Tokens for Fixed Tokens.
