coreDEX: Lending
Last month the team announced its plans for coreDEX, an innovative way to develop and host new instruments. These versatile tokenized products aim to bring the entire ecosystem together. The first coreDEX product is going live soon. With the launch of Delta, a new tokenized form of partially locked liquidity is becoming available to the platform. The next step is to tap into the locked liquidity of CORE and its LP tokens. We are going to take advantage of the unique floor price inside the CORE ecosystem to create loans for LP and CORE tokens.
TLDR: Soon you will be able to loan out your CORE LP for 25% of the floor price of those LP. Additionally you will be able to loan your CORE tokens in exchange for 100% of the floor price of those tokens, however this requires a lockup period. Both options require repayment with interest, with the exception of CORE loans at a 1 year term, which have a 0% interest rate. This will launch as part of coreDEX after an LP migration to the new coreLP is complete.
Rebalancing CORE LP
As you may know, CORE has a unique liquidity system, which allows us to allocate a floor price for both CORE and CORE LPs. In order for the CORE ecosystem to continue to grow, there will be a discrete pool rebalancing effort. All CORE LP will be turned into wrapped CORE LP and then subsequently into a single LP after pool rebalancing is complete. This process will be done on-demand for existing LP. Rebalancing liquidity will have as little market impact as possible, and ensure future liquidity reserves regardless of market changes. The goal of rebalancing is to secure and fortify CORE ecosystem against all market conditions. ETH, DAI and wBTC will be swapped with renBTC, ETH and DAI with the goal of locking the value in each respective coin. However, the majority of the LP will be rebalanced to be backed by DAI.
Lending With CORE LP
As soon as pool rebalancing is complete you will be able to borrow DAI against 25% of the LP floor price. During the loan period your LP farming profits will be forfeited to the other farmers, but your Uniswap LP fees will still accumulate. Loans will be offered at a fixed 6-month rate at no more than 5% annualized interest. After the 6 months have passed, the full amount must be returned. If a loan repayment is not made, the collateral will be liquidated. Normally this would adjust the price (and price floor) of CORE in the form of a liquidity removal. To offset this, the contract will burn the CORE tokens inside of the LP when performing a liquidation, leaving the price and price floor unchanged for CORE.
CORE Lending
Loans for CORE will look similar, but can only be issued in return for locking CORE for the duration of the loan. CORE loans can be repaid at any time before the expiration of the loan, however the initial collateral will only be returned once the expiration has passed. CORE lending will produce the equivalent of the floor price of your collateral, loaned in DAI. Rates for CORE loans will conform to the following schedule:
- 1 month locked for 15% fee
- 3 months locked for 10% per month fee (on principal only)
- 6 months locked for 5% per month fee (on principal only)
- 1 year locked 0%
Failure to pay off the loan will result in CORE being liquidated on the market. Any profit produced from the loan’s collateral will be distributed to LP farmers. This will reduce the circulating supply of CORE significantly, and allow people to hold both CORE and pursue additional investments.
How Much Can Be Borrowed?
In exchange for CORE LP, the system can loan the equivalent of 25% of the overall floor value of the LP. This is because the collateral needs to burn the CORE inside, in order to provide a liquidation to not affect the floor price of CORE. On the other hand CORE tokens can be loaned out against 100% of the floor price.
Loan vehicles will be available after LP migrations and rebalancing is complete as part of coreDEX launch.
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