💸Crypto Lending

HexaFinity loan protocol provides a pool-based loan strategy. Lenders provide liquidity by depositing tokens in a pool contract. Simultaneously, the pooled funds can be borrowed by placing collateral in the same contract. Loans do not need to be individually matched; instead, they rely on the pooled funds, the amounts borrowed, and their collateral. This enables instant loans with characteristics based on the state of the pool.

The Interest rate for both borrowers and lenders is decided algorithmically

• Borrowers: it depends on the cost of money - the number of funds available in the pool at a specific time as funds are borrowed from the pool—the number of funds available decreases, raising the interest rate.

• Lenders: this interest rate corresponds to the earn rate, and the algorithm safeguards a liquidity reserve to guarantee withdrawals at any time.

Suppliers

Users of the HexaFinity Protocol can deposit a range of supported cryptocurrencies or digital assets into the platform to serve as collateral for loans, provide liquidity, and earn an Annual Percentage Yield (APY). When users supply their cryptocurrency or digital asset to HexaFinity, they receive a hToken, such as hUSDT. This hToken is the exclusive token that can be used to retrieve the underlying collateral that was supplied.

Borrowers

Users wishing to borrow supported cryptocurrencies or stablecoins from HexaFinity must initially provide collateral to the protocol. After depositing these assets, users can borrow an amount based on the asset's collateral ratio, typically between 50% and 70%. For instance, with Ethereum's 70% collateral ratio, users can borrow up to 70% of their ETH value. Users must repay their initial borrowed amount and any accrued interest to the protocol to retrieve their collateral.

Risk & Liquidations

Suppose the value of a user's outstanding borrowing exceeds their borrowing capacity. In that case, a portion of the exceptional borrowing can be repaid in exchange for the user's hToken collateral at the current market price minus a liquidation discount. This discount incentivizes an ecosystem of arbitrageurs to quickly reduce the borrower's exposure and eliminate the protocol's risk. All liquidations are subject to a liquidation fee of up to 12%, with 3.4% transferred to hToken reserves and 8.6% paid to the liquidator as a discount.

Transferring 3.4% of the liquidation fee to hToken reserves reduces the risk of cascading liquidation, which could render the protocol insolvent. The protocol's ability to recover or utilize reserves will increase with each liquidation.