MathShow #022 — Over-Collateralized lending with Larix
Hello everyone, I’m Cici, the host of the math show tonight. Great pleasure to be here with Dimz, the CMO of Larix.
Today Dimz will talk about Larix — the lending gateway of Solana in MathShow. As you know, our AMA has 2 parts. 1st is presentation. Dimz prepared a sufficient content to talk about Larix.
Then in the second part, we collected some questions from enthusiastic community members. Our guests will answer them one by one. Participate in this issue of Math Show #022 will get a chance to share 3000 Larix.
Now, let’s go straight to the topic and listen to Math Show #022 together.
I am Dimz, CMO from Larix.
Larix is the lending protocol where users can participate as suppliers or borrowers on Solana chain. We are the first lending protocol on Solana who accomplished basic lending/borrowing functions in conjunction with a platform token distribution function. For now, we have 15k mainnet users and had 47k testnet users prior to our launch.
So how do we operate a lending/borrowing platform and why did we choose the Solana blockchain to build on?
Larix adopted a dynamic interest rate model and created capital-efficient risk management pools, as such a broad selection of collateral types are available that can be fully utilized in a safe way. Furthermore, the LARIX token, based on a delicately designed token economy, enables continuous incentive allocation to boost real demands.
Solana now is on its way to becoming a very popular public chain for the DeFi world due to its lower trading fees and faster transaction speeds. At the heart of Solana’s ascendancy is the Proof of History algorithm leveraging SHA256, which enables a throughput of higher than 50,000 TPS, averaging 400–600ms block time, having 900+ nodes globally, with an extremely low transaction fee of ~$0.00025. For now, Solana has already built a strong ecosystem occupying ranges of projects: DeFi, Cross-chain assets, Gaming, and NFTs.
Keeping in kind that we are transitioning away from traditional banks and we are taking matters into our own hands. It begs the question of what is deemed fit for collateral and which digital assets qualify as stable enough to borrow against.
Let’s look at our Roadmap and our three phases.
In PHASE 1, we only accept the most popular cross-chain assets with large market caps, At the moment, we support BTC, ETH, SOL, USDT, USDC, FTT, RAY, and Serum. The reason is for the safety of the users and to mitigate any potential liquidity risks on the platform. Hence, stability, security, and longevity is our core focus.
In PHASE 2, Larix will move on to accept synthetic assets like indexes, gold, and stocks. Indexes are a good way to give users an added layer of guarantee, to collaborate cross-chain assets with SPL tokens, for example, ‘BTC-SOL-RAY-USDC’ index. An amazing project building this at the moment is Symmetry, and we looking forward to collaborating with them on this.
In PHASE 3, Larix will begin to accept NFTs as P2P lending. NFT now is a huge market and have locked a large amount of token value. We want to give NFT holders the chance to collateralize their appreciating collectables and be able to borrow against that value.
So in short.
Phase1: over-collateralized lending
Phase2: we plan to cover margin loans, AMM liquidity, and wider collateral types (stocks n commodities)
Since we can handling loans governed within a smart contract protocol,
we have to mention that safety of the pool and user assets is something we pride ourselves by.
You see, if you support tokens which have a market cap of only $10m for example, it raises the risk of manipulation and radical price fluctuations. When that kind of token is collateralized on the Larix protocol and suffers a fatal drop in price, you have to bear the liquidation loss. That’s why we only accept big LARGE cap assets, which are safer to integrate into an over-collateralized liquidity pool.
Security is at the core of Larix. Here are some examples of how the Larix protocol insures user assets:
Firstly, an isolated liquidity pool avoids relevant risks in response to multiple flash-loan attacks and malicious market manipulations.
Secondly, our dynamic interest rate model manages liquidity to avoid a “Bank Run” when depositors need to withdraw assets from the pool. Hence, the interest rate is determined by the utilization rate of the liquidity pool which changes every 0.4s, made possible by the Solana Blockchain.
Thirdly, to emphasize secured collateral, assets are supplied to the liquidity pool and additionally selected for collateral to borrow against. Therefore, assets not selected for collateral can never be liquidated. The control is 100% in the users’ hands.
Lastly, that of instant liquidation, Larix also provides an 8% liquidation bonus to liquidators, to facilitate fast liquidation times.
We have also added a MINING FUNCTIONALITY that distributes the platform utility token to users who interact with the protocol.
Our mining capability imbedded within the lending protocol has added tremendous value to our users.
Users who provide liquidity and interact with the platform are rewarded as a way to distribute $LARIX tokens to our wider community.
The current daily distribution amounts to 705,000 tokens per day, which is valued at roughly $58,000 at the time of writing. This is subject to decrease over time, set forth by our tokenomics within the roadmap.
So we launched our Mainnet middle of September. What has happened since then? Some updated.
Recapping what Larix has accomplished in the last month and how we are anchored in the Solana ecosystem to take advantage of what is coming for our industry: Total Value locked in Larix reached $500 million
- We have strategically formed partnerships with Raydium, Marinade, Tulip Finance, and Orca
- We have integrated with Sonar Watch, DeFi Llama, Math wallet, C98 wallet, Slope wallet
- Listed on MEXC, Bitmart, Gate and LBank, Raydium, Step and Dexlab
- Available on Coinmarketcap and Coingecko
It’s very useful content for the audience.
Then is the 2nd part. We have some questions selected from our community members here.
Q1. Now Larix’s TVL is the largest loan on solana, do you have any ideas for the future increase of TVL?
That is a question pertaining to the amount of assets locked in the protocol as well as the price of those assets over time.
I cannot dismiss considering the broader macro crypto market here.
DeFi is competitive, users have options between Solana and Ethereum.
Solana is known for low fees and faster transactions. Therefore, we will see influx into the Solana ecosystem. We intend to capitalize on that influx, and we have been doing so from the start. The more DeFi users the broader space gets, the higher TVL goes if a solid product is maintained and expanded.
Our TVL will organically grow over time, especially given what we have planned.
Keep in mind that we are in Q4 of mid bull market.
The crypto market has been waiting four years for this. BTC touched ATH yesterday and the broader crypto market is set to absolutely explode in the next coming months.
That is another reason why TVL across the board is set to grow in tangent.
We are very excited for what is coming.
Q2. Larix supports assets represented by NFT that are mapped to real assets as collateral. How is it prepared to determine changes in value and have these changes automatically configured to the chain?
NFT as collateral. Excellent question.
The emergence of Oracles have added tremendous value to smart contracts which in fact is the exact reason how asset prices from the outside world can interact with the cyber world’s smart contract governed protocols of DeFi.
NFT is a very young concept and there are teams working hard in the space to guide it through the process of price discovery.
We have recently seen the unicorn NFT marketplace get accused of insider trading.
This already associates a high risk to this segment of digital assets. We are very careful how we will implement NFT as collateral on our platform.
We want to be absolutely certain about NFT values prior to incorporating them as supported collateral.
The depositing of NFTs is no problem, determining their floor prices and tradable value over time is also no difficult talk.
We want to enable a P2P marketplace for NFTs. True DeFi taking into account ALL VALUABLE ASSETS.
Q3. Larix is currently the highest lending project on TVL on Solana, but I have observed your medium, twitter, and market exposure, and I don’t feel that the content is too much. Do you have any considerations and future plans in terms of market exposure in the future?
We are not too heavily focused on marketing. We have developed our product, our platform, tested it, had our code audited, and monitored our lending protocol. We have designed something beautiful here.
A dynamic interest rate model. We have been focusing on adding value to users, and developing partnerships within the Solana Ecosystem the last month. Our plans for market exposure in the future?
We are working on building communities in different jurisdictions, and onboarding them to the world of Sovereign banking.
Thank you Dimz.
Math Show #022 is finished. Thank you again for your time and listening, we will see you in the next issue, goodbye everyone~