THE GORILIX PROTOCOL
Gorilix DeFi can be understood as a P2P system with openly accessible smart contracts built on the Ethereum blockchain that would allow the borrowers to take out the crypto loans, whereas the lenders having the surplus assets will be able to offer the loans by locking their crypto assets into the protocol and earning interest over the locked assets.
As an algorithmic money market protocol, Gorilix Protocol will allow the users to earn interest income or borrow blockchain assets against the provided collateral. Anyone can supply assets to Gorilix DeFi's liquidity pool and immediately start earning continuously. The interest rates will adjust automatically based on the supply and demand within the ecosystem.
It is to be noted that the supply and demand of any crypto asset will influence the interest rates paid and received by borrowers and lenders respectively. Loans can be repaid at any moment, and locked assets can be withdrawn thereafter.
Supplied asset balances will be represented by $SILVA, (the native ERC 20 token of the Gorilix protocol): representations of the underlying asset that earn interest and serve as collateral. Users will be able to borrow up to 50-75% of their $SILVA value, depending on the performance and goodwill of the underlying crypto.
In terms of utility, users who have made long-term crypto investments, (known as HODLers or Diamond Hands) in Ether or other ERC 20 tokens can leverage on the Money Market of Gorilix Protocol to magnify their gains.
For example, a user HODLing Dai tokens, can deposit them into the Gorilix Protocol and earn high yield interest (in Dai) without having to maintain their asset, fulfill loan requests, or incur speculative risks.
Let’s have a look at all the features that Gorilix Protocol will be offering to the users.
The users supplying the blockchain assets to the Gorilix Protocol will become eligible to earn a variable interest rate immediately. The interest amount shall accrue after every Ethereum block finality (12-60 seconds), and the users will be able to withdraw their principal amount coupled with the interest income anytime. In other words, the lenders who will be supplying their crypto assets to a liquidity pool available for other users to borrow shall have a share in the interest amount paid by the borrowers to the pool.
While supplying the crypto assets to the protocol, the lenders shall receive the gTokens from Gorilix Protocol in return, which are ERC 20 tokens redeemable against the underlying crypto assets anytime. The gTokens will be redeemable at an exchange rate (how much Ether one gETH is worth), relative to the underlying crypto assets and will increase over the time based on how much interest is accumulated by the underlying crypto asset.
As reference, Alice and Bob want to lend their USDC holding to the Gorilix Protocol. As a result of this action, they will receive gTokens from the protocol against the supplied USDC. Now, let’s assume that the gToken exchange rate opens at 0.030000 and increases at the compounding market interest rate which might bring the exchange rate to 0.031682, hence providing yield opportunity to Alice and Bob on their crypto assets.
gTokens is integrated to the Gorilix Protocol through gToken contract and can be labeled as a primary mode for interacting with the Gorilix Protocol while performing an activity like borrowing, minting, redeeming, liquidating a borrowing, repaying a borrowing, transferring gTokens, etc. There are two types of gTokens i.e. gETH and gERC20 where the former wraps the Ether and the latter wraps the underlying ERC 20 crypto asset.
The new gTokens will be minted whenever a user will make deposits of his/her crypto-assets into the Gorilix Protocol. For example, if Bob wants to take out a loan by providing Ether as collateral, then he will automatically receive gETH from the protocol in return for the deposited Ether. If Alice wants to use Dai to earn interest, then she will receive gDai whenever she will complete depositing the Dai into the protocol.
The users will be able to use Gorilix Protocol to borrow crypto assets by providing another type of crypto asset as the collateral value via the same mint function which is used while supplying assets to the protocol.
The crypto assets supplied as collateral shall earn interest but the users will not be able to redeem or transfer these assets as long as they are being used as a collateral. It is also to be noted that the maximum amount a user will be able to borrow shall be restricted by the collateral factors of the crypto assets that have been provided to the Gorilix Protocol.
For example, if Alice provides 200 USDC as collateral value where the posted collateral factor for the USDC asset is 80%, then Alice will be able to borrow a maximum of 160 USDC worth of crypto assets only. Every crypto asset on Gorilix Protocol shall have a different collateral factor which can be called using the Comptroller contract.
Once the borrowed amount has been repaid, the collateral value of the crypto asset can be entirely redeemed or transferred.
The collateral factor value to each crypto asset shall be assigned to determine the borrowing power in the protocol. This value shall range anywhere between 0 and 1 and will help in determining the amount of funds that can be borrowed by locking in the underlying crypto asset with the protocol. This collateral factor value shall be assigned based on the metrics like volume and liquidity, performance, etc.
For example, if a particular crypto asset has a small market cap with low liquidity, then it will have low collateral factor value assigned to it which would not make it an ideal choice for borrowing funds, and hence, the amount of funds that can be borrowed against this asset will not be significant. On the other hand, if a particular crypto asset has a large market cap and high liquidity, then it will have competitive collateral factor value, allowing the users to borrow a relatively larger amount of funds via Gorilix Protocol.
Hence, the borrowing power of an individual in the protocol shall be calculated by multiplying the underlying token balance of a user with the collateral factor value assigned. It is to be noted that the users will not be able to borrow the funds beyond their capacity with further limitations that would prevent the borrowing account to borrow additional funds, transfer the assets in collateral, or redeem the assets in collateral to defend the Gorilix Protocol from the risks.
A borrowing account in the Gorilix Protocol shall be deemed insolvent if the borrowing balance surpasses the amount of funds that can be actually borrowed according to the collateral factor value. In a situation of an account becoming insolvent, the other users in the protocol shall become eligible to repay a part of the outstanding debt balance in return for a slice in the collateral coupled with a liquidation incentive.
If the liquidation incentive is set at 11%, then it means that the liquidators shall receive the collateral of the borrower at a price which will be 11% less than the market price. Hence, if your account is liquidated, then it means that you will end up losing some part of it. This is an important requirement to reduce the quantum of risk in the Gorilix Protocol.