Fraxlend Overview
An isolated pair lending protocol
Last updated
An isolated pair lending protocol
Last updated
Fraxlend is a lending platform that provides lending markets between a pair of ERC-20 assets. Each pair is an isolated market which allows anyone to participate in lending and borrowing activities. Lenders are able to deposit ERC-20 assets into the pair and receive yield-bearing fTokens. As interest is earned, fTokens can be redeemed for ever-increasing amounts of the underlying asset.
The main purpose for the creation of Fraxlend was for usage by the Fraxlend AMO. The AMO contract supplies protocol-owned FRAX (and other Frax ecosystem tokens like frxETH and sfrxETH) for other users to borrow, in exchange for those borrowers depositing various collateral tokens and paying interest. This both generates income for the protocol and diversifies the collateral backing FRAX.
The max loan-to-value (LTV) for each pair can voted on by the community, but generally is around 75% for pairs with volatile tokens and 90% for stablecoin/stablecoin pairs (the latter is generally less risky). The protocol also maintains a liquidation bot, but liquidations can be performed by any user against any unhealthly/underwater position.
Fraxlend UI: Link
Public Repo: https://github.com/FraxFinance/fraxlend
The primary participants in Fraxlend are Lenders and Borrowers, these participants interact with individual Pairs.
Lenders provide Asset Tokens to the pair in exchange for fTokens
Borrowers provide Collateral Tokens to the pair and in exchange receive Asset Tokens. Borrowing incurs an interest rate which is capitalized and paid to lenders upon redemption of fTokens.
Beyond Pairs, the rest of the ecosystem includes: Oracles, Rate Calculators, and the Fraxlend Pair Deployer
Each pair relies on an Oracle to determine the market rate for both the Asset Token and the Collateral Token. Oracles combine price feeds from multiple places to achieve a robust and manipulation resistant price feed.
Each pair is deployed with a Rate Calculator. These contracts calculate the interest rate based on the amount of available capital to borrow. Typically less borrowing will lead to lower rates, with more borrowing leading to higher rates.
Each pair is deployed by a Deployer contract
The pair Registry keeps track of all Fraxlend Pairs deployed
