🏦Lending Market

Lending Market Overview

The v3 Lending Market will be housed within the v3 interface, with contracts being inspired by Aave v2. The Lending Market is a core module within Thetanuts Finance v3, enabling users to go long or short on on-chain options.

Parameters for the Lending Market

• Supported Assets: The Lending Market will support $XYZ-C, $XYZ-P, $XYZ, and $USDC assets.

• Flash Loans: Similar to Aave v2, the Lending Market will enable flash loans - allowing users to borrow up to 95% LTV, implying a theoretical 20x leverage limit on long positions. In reality - the leverage on a long position may be lower due to slippage, price impact, and fees on the AMM.

• Interest Rates: The Lending Market will use a fixed interest rate model between epochs, which can be changed in the future based on governance.

Actors in the Lending Market

• Lenders: Lenders can deposit Basic Vault LP Tokens (i.e. $XYZ-C, $XYZ-P) into the Lending Market via "Boost", and receive Lending Interest from Borrowers.

• Borrowers

  • For Long Positions: Under the hood, users that open long positions on Thetanuts Finance v3 are essentially borrowing Basic Vault LP Tokens from the Lending Market and selling them on the AMM.

  • For Capital Efficiency: Users that have supplied collateral into the Lending Market can borrow against their Lending Market positions.

Using the Lending Market

After a user opens a short call or short put position, the user will be prompted to Boost – which deposits the Basic Vault LP Tokens into the Lending Market. By providing liquidity on the Lending Market, Lenders generate yields in the form of Lending Interest.

Lenders on the Lending Market may then borrow against their positions, borrowing $XYZ or $USDC depending on the pools that they have supplied. This enables users to achieve greater capital efficiency on their short position trading collateral, and allowing them to use borrowed capital from the Lending Market to interact with other components of the Thetanuts Finance v3 ecosystem.