TL;DR

Too Long; Didn't Read

If you want to get an overview before digging in the documentation, here are the main things you need to know :

  1. LendBook is a Lending Limit Order Book. Each market is isolated and collateral assets are not lent out to borrowers

  2. There are 3 types of market participants:

    • Lenders post limit orders at specified prices which can be borrowed.
    • Borrowers deposit collateral in order to borrow assets posted by lenders.
    • Takers can assets when the market price hits the order's limit price. No fees applied.

  3. Orders can only be posted within a restricted range of limit prices, known as pool-of-orders. Each pool-of-orders has an assigned limit price. Orders are grouped into pools to prevent liquidity dilution, allowing lenders to withdraw anytime as long as all there is non-borrowed liquidity in the pool.

  4. The interest rate is calculated per pool. It depends on the pool's utilization rate. Borrowers who borrow from a pool pay interest rates to the lenders who have supplied the pool.

  5. The market price is given by an oracle. When market price reaches the limit price of a pool-of-orders, borrowing positions from that pool are liquidated. Lenders receive the borrowers' collateral plus the interest rate and liquidation fee.

  6. There are 2 types of liquidations :

    • Price-based liquidation when the market price reaches the pool limit price, borrowing positions are liquidated;
    • Interest-based liquidation when a collateralized position becomes under-collateralized due to the accumulation of interest rate. In case of liquidation, borrowers need to pay a small liquidation fee.

  7. LendBook offers users multiple benefits:

    • No bad debt — Borrowing positions cannot go under-collateralized
    • No off-chain risk management — Risk management is on-chain and market-driven. The risk is not managed by DAOs or opaque curators.
    • Simple debt management — Borrowers know the exact liquidation price in advance, not an approximation.
    • Low liquidation cost — Liquidation fee = 3% for volatile assets (e.i. ETH/USDC market)
    • High Loan-To-Value — MaxLTV = 96% for volatile assets
    • High leverage — Max Theoretical Leverage is x25 for volatile assets
    • Near zero governance — on the path to full decentralization.