4.3. Permissionless Money Market Factory
The backbone of this design is a factory contract.
The platform, and how it is designed, effectively allows anyone to deploy a new instance of a money market based on the Compound code, with any token and USDO as the pair.
The instance has only 2 tokens, one which is the token the user wants and the second is by default USDO.
USDO price is defaulted to 1 on the system and the price of the other token is read typically from an AMM such as Uniswap. The collateral factor is also adjusted dynamically based on the trading volume averaged over the prior week (configurable). The thesis here is liquidity determines collateral factor, since if you have high liquidity, a default can always be addressed by seizing the collateral tokens and selling them. The higher the liquidity and trade volume, the greater the collateral factor.
The collateral factor is adjusted upwards or downwards per transaction based on the preceding trade volume.
This effectively allows a different interest rate for USDO lenders based on the collateral factor.
The system is now effectively a two-tiered model, where you can always use quality onchain and offchain assets to mint USDO at low interest rates.
Those who mint USDO against onchain assets and tier-1 collateral could then use the USDO to lend and earn a higher interest on it, add it to a liquidity pool alongside another asset, or use it for any other purposes they want.
They get to choose which collateral is backing it, and the interest rate differs per collateral market thus reflecting the differentiation of collateral.
On the UI, users will have the ability to pick which tokens to accept as collateral and then lend against them.
Last modified 3mo ago
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