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Introduction
Pixels.so is a liquidity protocol that enables borrowing different cryptoassets from the liquidity pools. Depositors accrue cryptoassets, in exchange of cryptocurrency deposits.
Pixels.so is a liquidity protocol that offers users to borrow cryptocurrency from our liquidity pool by putting up an NFT as collateral which can be done with two models.
The Peer-To-Peer borrowing model and Instant Liquidity borrowing model.
This is where a user deposits their accepted NFTs and will be able to borrow against the market value of their asset. Borrowers will be able to borrow up to 25% of that NFT’s value. The borrower will have immediate access to liquidity, which comes from an interest-bearing USDC pool supplied by the lenders. This Instant borrowing model will be accepting Solana NFTs, ERC-721 NFTs, or other Metaverse assets.
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Payments will be made at the discretion of the borrower. However, the borrower must maintain certain loan-to-value (LTV) thresholds.
The interest rate model will use dynamic pricing, influenced by the supply of the USDC pool and demand for borrowing which is called the utilization ratio. If there is a high amount of USDC being requested but a low supply of USDC deposited to borrow from, rates will dynamically adjust upward. This means that USDC deposits are incentivized in times of high borrowing demand, meaning high interest rates. It also means borrowing against your NFT is incentivized in times of high deposited UDSC supply, meaning low interest rates.
The NFT pricing/valuation process will be determined via a pricing oracle with data being fed through all major NFT marketplaces. Pricing will be based on the average sale price, the average floor price, and will be time weighted to protect against anomalies that occurred. Prior to requesting a loan for the NFT, our platform will use this model to determine the current price of the collateralized NFT.
NFTs can be deposited by the borrowers permissionlessly, this is where a loan can be requested against the NFT’s value. Then the lenders on the platform can commit the capital requested and earn the specified APY. This APY is proposed by the borrower and is static once set. The timing could range from 30 days to 120 days. The borrower must make a final payment of principal and accrued interest by the specified contract end date, otherwise, the collateral (NFT) will default to the liquidity provider.
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The interest rate will be set by the borrower and agreed to by the lender. If a liquidity provider agrees to the borrower’s terms, then the provider will approve the contract and commit capital.
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The borrower must payoff their loan in the specified time period (30, 60, 90, 120 days) which is decided upon prior to requesting the loan. If the borrower does not payoff their loan plus accrued interest, then the collateral will default to the wallet that provided the liquidity for the loan.
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At any point in time, the liquidity of the protocol can be assessed through the utilization ratio: the amount that is currently borrowed in our pools for each currency we offer to be borrowed.
In this section, we dive into how our unique Interest Rate Model offers strong mitigation to liquidity risk.
Last modified 1yr ago