Technical Process
A more detailed technical paper may be released in the future.
The technical process for the Warp Protocol is as follows, and will occur in an entirely decentralized manner:
Component 1: a user interested in receiving a loan will be able to do so by depositing LP tokens into the platform.
Users can deposit the four following Uniswap LP token pairs: (WBTC-ETH), (ETH-USDC), (ETH-USDT), and (ETH-DAI).
Users will be able to receive DAI, USDC, and USDT with a collateralization ratio of 150% against their LP tokens. The interest rate will be calculated dynamically using a similar algorithm to other crypto lending platforms.
Component 2: non-compliant loans will be liquidated.
If the value of the collateral dips below the 150% collateralization threshold the liquidation process begins. The liquidation price would be equal to (generated stablecoin*liquidation ratio)/(amount of collateral).
A loan becomes liquidatable as follows. Let’s consider you added collateral valued as $1000. You are able to borrow a maximum 66% of your added collateral, which means $666. After a while, your total collateral value in USD decreases to $800. 75% of $800 is $600, which is lower than what you borrowed. At this moment your loan can be liquidated.
Warp Finance will invite users to liquidate these positions. For doing so, Warp Finance takes a fee equal to 15% of the value of the collateral, with the remaining liquidation value going to the liquidator.
The Chainlink Price Oracle will be used as a source of price data for determining the value of LP tokens.
Liquidation of your funds is possible. Read here if you need to learn more about liquidations.
Last modified 8mo ago
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