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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.