Reward Mechanisms

Discover how our platform optimizes financial returns for both lenders and borrowers through advanced reward mechanisms.

Enhanced Reward Mechanisms

Overview: Our platform is designed to maximize benefits for both lenders and borrowers through a dynamic reward distribution system that leverages staking rewards and interest adjustments.

Dynamic Reward Distribution

Functionality:

• Initial Staking Rewards: When collateral is first deposited, it is actively utilized in various lending protocols to generate staking rewards. These rewards are initially directed entirely to the lender, amplifying their returns on top of the standard interest earned from the loan.

• Shared Rewards Upon Borrower Activation: Once a borrower activates a loan by depositing their collateral, the staking rewards generated by both the lender's and borrower's funds are split evenly (50/50). This equitable distribution ensures that both parties benefit from the ongoing profitability of their invested funds.

Interest Dynamics and Borrower Benefits

• Interest Adjustments for Borrowers: The introduction of borrower's collateral not only facilitates shared staking rewards but also enables potential interest rate discounts. Depending on the performance and returns from the staked collateral, borrowers may experience reduced interest rates on their loans. In some scenarios, if the staking rewards are sufficiently high, the effective interest rate for borrowers could even become net positive, meaning they earn more in staking rewards than they pay in interest.

• Lender Benefits: Lenders continue to receive interest payments on the loaned amount while also enjoying a share of the staking rewards. This dual-income stream enhances the overall return on their investment, making lending through our platform particularly attractive.

Adaptive Reward Strategy

• Potential for Adjustment: Our platform maintains the flexibility to adapt the reward sharing percentages if a more efficient or equitable method is discovered. By continuously analyzing market conditions and staking performance, we can optimize reward distributions to ensure maximum benefits for both lenders and borrowers.

• Vault Manager Involvement: The Vault Manager plays a crucial role by managing the borrower's collateral and ensuring that interest from this collateral is used to pay the lender throughout the repayment period. This management ensures that the lender's returns are secured and enhances the borrower's ability to repay by effectively using the income generated from their collateral.