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Market

Isolated lending market with configurable IRM and collateral delegation.

OctoLend_Market.png

Overview​

The Lending Market is OctoLend’s single-asset credit engine. It accepts deposits of one asset, issues vault shares to LPs, holds user collateral (plus any delegated collateral from a Collateral Vault), mints/burns “debt tokens” to track borrower liabilities, and orchestrates interest, withdrawals, and liquidations.

Each market is self-contained: parameters, oracle, and interest-rate model are bound to that market instance.

Purpose​

  • Create isolated, immutable lending pools with predictable risk.
  • Support collateral posted directly by borrowers and collateral delegated via Collateral Vaults.
  • Price debt deterministically via the market’s Interest Rate Model (IRM), enabling transparent accounting and liquidations.

Core Components​

  • Collateral Asset: Token address used as collateral (standard Stellar/OZ FT compatible).
  • Loan Asset: The single underlying asset supplied and borrowed in the market.
  • LLTV (Liquidation Loan-To-Value): Maximum borrowing percentage before liquidation risk.
    • Example: LLTV of 80% means for a collateral value equivalent of 100,themaximumonecanborrowinvalueis100, the maximum one can borrow in value is 80. If the loan value exceeds 80(e.g.,80 (e.g., 80.0001), the position becomes liquidatable.
  • Oracle: Smart contract address pricing the collateral asset (e.g., vs USD) used to compute LTV and liquidation logic.
  • IRM (Interest Rate Model): Smart contract address that computes the borrowing rate and debt token pricing for the market.
  • Delegation (optional): If a Collateral Vault address is set, the borrower’s borrowable amount considers both posted collateral and delegated collateral (via get_allocation).

Collateral Asset​

  • Supply collateral: Borrowers deposit the designated collateral asset into the market; balances are tracked per borrower.
  • Withdraw collateral: Allowed only if the remaining collateral value stays above the requirement implied by the loan and LLTV. The market rejects withdrawals that would make the position under-collateralized.
  • Delegated collateral: The market queries the Collateral Vault for current allocated amounts to the borrower. Delegation increases effective collateral and is considered in capacity and liquidation math.

Loan Asset​

  • Deposit / Mint: LPs supply the underlying and receive market vault shares. The market routes newly supplied assets to the Treasury for safekeeping.
  • Withdraw / Burn: Lenders can withdraw anytime, subject to available liquidity. Market vault share is burned.

Oracle​

  • SEP-40–style price feed for the collateral asset:
    price(asset, timestamp) → price with declared decimals.
    decimals() → price precision.

  • Oracles are set per market and used to compute collateral value, LTV, borrow capacity, and liquidation math.

  • Oracle endpoint: https://reflector.network/

Liquidation​

LTV (monitoring):
LTV_bps = borrowed_value / collateral_value × 10_000

Where:
borrowed_value = borrowed_debt_tokens × debt_token_price
collateral_value = (posted_collateral + delegated_collateral) × oracle_price

Available to liquidate:
The protocol computes, in value terms, how much of a position is liquidatable to restore it within the Liquidation Threshold.

Liquidation Flow​

  1. Liquidator repays up to the available amount to the Treasury.
  2. Liquidator receives collateral worth repay × (1 + liquidation_bonus_bps), priced by the oracle.
  3. Seizure order: Borrower’s own collateral first; if insufficient, the shortfall is pulled from delegated collateral (via the Collateral Vault).
  4. Debt tokens are burned to reflect the repaid value.

Parameters​

  • Liquidation Threshold (bps): Maximum allowed LTV before a position becomes eligible.
  • Liquidation Bonus (bps): Premium paid in collateral to liquidators.

Interest Rate Model​

The Interest Rate Model bound to the market computes:

  • Instantaneous annualized borrow rate from utilization and model state.
  • Debt compounding between accruals (updates total debt assets).
  • Debt token price used to value and settle all borrower liabilities.

Different IRM profiles (utilization-based, fixed-rate, or fixed-with-kink) can be selected at market creation.

Collateral Delegation​

By default, delegation is disabled, but it can be enabled during market initialization. When enabled, the Market will check the delegation position of a borrower in calculating borrow capacity.

Borrowing & Repayment​

  • Borrow capacity: Based on the risk-adjusted value of a borrower’s posted collateral + delegated collateral, priced by the oracle and bounded by the market’s Liquidation Threshold (LLTV).
  • Borrow:
    • Capacity and available liquidity are checked.
    • Debt is recorded in the Market contract with the amount principal / debt_token_price.
    • The underlying token is transferred from the Treasury to the borrower.
  • Repay:
    • The underlying token is transferred to the Treasury.
    • Debt tokens are burned in the amount repay / debt_token_price.
    • Borrower can withdraw collateral.

Access Control​

  • Admin: Can pause/unpause the market and manage roles.
  • Treasury: Serves as the funding endpoint for borrows and repayments.
  • Pause state: When paused, the market disallows state-changing operations (e.g., borrowing); read functions continue to work.