Order Book Implementation
Last updated
Last updated
The Atlendis protocol consists of a succession of liquidity pools, which are structured as interest rate order books. There is no limitation as to how many pools a borrower can open, as long as the pools' opening proposals pass Atlendis' governance process. A pool is characterized by a set of parameters, e.g. maturity, minimum and maximum rates, and liquidity rewards rate, that make them very flexible and adaptable to a wide set of use cases.
Order books consist of a succession of interest rate ticks, which can be seen as sub pools of funds. The Atlendis protocol's rate discovery mechanism starts from the hypothesis that lenders will deposit funds into the pool after having done their own due diligence on the borrower they have selected.
As such, Atlendis Labs expects lenders to adapt the interest rate they request on their deposits to the perceived default risk of the borrower: the riskier the loan, the higher the rate. While there are no active loans, the funds are split into different interest rate ticks, and deposited on a third-party yield provider protocol to earn interest.
These ticks mutualize the deposits of several lenders, and offer an interest rate profile for loans to the borrower. An order book can be visualized as the following:
When a loan is requested by the borrower, the Atlendis protocol will iterate on the successive ticks to gather the necessary amount to be loaned, withdraw the funds from the third-party yield provider, and send them to the borrower. In that case, the order book can be visualized as the following:
The loan that the borrower takes on the Atlendis protocol is actually a composite of loans taken on each interest tick. The whole loan interest to be repaid at maturity is the weighted average of the amounts borrowed with the interest rate ticks.
During repayment, the same iteration is done over the interest rate ticks to send funds and interest back.
An order book in the Atlendis protocol can be seen as an accounting layer above the third-party yield provider, in which mutualized bids for loans at a target interest rate are matched with the borrower's requests.
