Supply-Borrow User Experience

Minterest operates similarly to other lending protocols with two key user activities - supply and borrow of liquidity.
As an example:
  • a liquidity supplier “Lenny” supplies an approved asset to a Minterest token market. The protocol lends the assets in the pool to borrowers. As long as Lenny continues to supply assets to the protocol’s token market, he earns a dynamic interest rate algorithmically determined by the proportion of total assets he has supplied versus the total assets borrowed from the pool.
  • A borrower “Bob” supplies approved collateral to the protocol to borrow a set amount of tokens. The protocol uses oracles for price feeds to determine current values for both the supplied and borrowed assets. To uphold the required utilisation ratios between the various token pools, the protocol ensures Bob maintains an over-collateralised position.
  • While Bob maintains an open borrow position with the protocol he pays a dynamic interest rate. That rate is algorithmically determined by the proportion of total reserves of the asset type he has borrowed versus the total of that asset supplied by liquidity providers of the protocol.
  • Bob’s borrow position becomes insolvent if the assets he supplied no longer meet a required threshold. If that occurs, the protocol automatically liquidates a portion of Bob’s collateral assets and acquires the same assets Bob has borrowed in order to reduce Bob’s outstanding loan and return him to a solvent position.
  • Lenny and all other suppliers of the same asset receive the interest paid by borrowers of the token pool assets as compensation, in line with their portion of the pool. If there is a liquidation event, suppliers continue to receive their supplied assets and interest.
  • When liquidity providers supply assets to the protocol, corresponding receipt tokens are generated which represent their portion of the pool for that particular asset. The accrual of interest to be paid to suppliers by borrowers is calculated discreetly, i.e. per block, with the calculation automatically adjusting the exchange rate of the receipt token relative to the asset supplied.