DeFi Lending
Lending protocols, interest rates, collateralization, and flash loans.
Overview
Lending protocols enable borrowing and lending on-chain.
Lending Protocol Architecture
Interest Rate Model
contract InterestRateModel {
uint256 public baseRate;
uint256 public slope1;
uint256 public slope2;
uint256 public optimalUtilization;
function getRate(uint256 utilization) public view returns (uint256) {
if (utilization <= optimalUtilization) {
return baseRate + (utilization * slope1 / 100);
} else {
uint256 extra = (utilization - optimalUtilization) * slope2 / 100;
return baseRate + slope1 + extra;
}
}
}
Collateralization
python
# Calculate collateral factor
def calculate_collateral_factor(asset, risk_score):
factors = {
"ETH": 0.75, # 75% collateral factor
"WBTC": 0.70,
"USDC": 0.85,
"DAI": 0.80
}
return factors.get(asset, 0.5)
# Check liquidation
def check_liquidation(debt, collateral, price, collateral_factor):
collateral_value = collateral * price * collateral_factor
return debt > collateral_value
Flash Loans
// Aave-style flash loan
contract FlashLoanReceiver {
function executeOperation(
address asset,
uint256 amount,
uint256 premium,
address initiator,
bytes calldata params
) external {
// Execute arbitrage or other strategy
// Must repay loan + premium
IERC20(asset).transfer(
msg.sender,
amount + premium
);
}
}
Liquidation
python
def liquidate(underwater_position):
# Calculate liquidation bonus
liquidation_bonus = 0.05 # 5%
# Get collateral
collateral = underwater_position.collateral
debt = underwater_position.debt
# Liquidate
liquidation_amount = debt * (1 + liquidation_bonus)
return {
"collateral_to_seize": liquidation_amount,
"debt_to_repay": debt
}
Practice
Build a simple lending protocol with interest accrual.