# About  Loan

BXH Lending Module is a smart contract-based lending project with a modified lending protocol based on the Compound protocol, aiming to become a one-stop decentralized service platform for multiple chains to achieve pledged lending. It is currently live on the BSC mainnet and will be deployed on more chains such as HECO in the future.



**BXH lending parameters**

【Lending amount = market value of collateralized assets \* collateral ratio】

**\[Collateral ratio]**

Collateral ratio refers to the value of the market value of the collateralized assets that can be borrowed. Because crypto asset prices are relatively volatile, different tokens correspond to different collateral ratios (refer to token collateral ratio for details).

Update time: October 10, 2021

![](https://2864812212-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MkBV9Fv-DS0oWaGAy7x-1703796690%2Fuploads%2FIbZwBt4HaPElLlnrHWQG%2Fimage.png?alt=media\&token=ff9e490a-89f5-4b78-b6d2-e0fb51a5b937)

For example, if the collateral ratio for BTC is 85%, then BTC worth 10,000 USDT can be lent out for a maximum of 8,500 USDT.

**\[Exchange Rate]**

When a lender deposits DAI asset into the money market, the platform will exchange the DAI into the platform's cDAI at the platform's real-time Exchange Rate, a process known as Mint Token.

The lender can terminate the lending at any time and does not need to wait for the borrowed assets to mature. When the lender redeems the principal and interest income from the lending, the platform will convert the cDAI held by the lender into DAI at the real-time exchange rate.

Where

Exchange Rate = (Total Cash + Total Borrows –Total Reserves) / Total Supply

Where

Total Cash: the number of DAIs deposited by the lender into the smart contract that have not yet been borrowed

Total Borrows: the number of DAI due to be repaid by all borrowers (principal + interest borrowed)

Total Reserves: the total number of platform reserves (the portion of borrowers' interest is retained as platform reserves)

Total Supply: the total amount of cDAI received by all lenders

**\[Principle]**

Refer to the document: [https://juejin.cn/post/6844903774620745742](https://juejin.cn/post/6844903774620745742)



**Liquidation Rules**

\[Loan Utilization Rate = Actual Loan Amount / Account Available Lending Amount

When the loan utilization rate exceeds 100%, the BXH lending agreement will trigger liquidation

Maximum safe borrowing amount = available loan amount\*85%]

**Example**

Deposit collateral \[10000 USDT + 10000 USD worth of BTC

Available loan amount in account = (10000 x 90% + 10000\*85%) = 17500 USDT

Maximum safe borrowing amount = (17500 x 85%) = 14875 USDT, leaving $2625 as a buffer against price fluctuations.

\[Note the risk] Once the percentage of loan utilisation approaches 100% the risk of being liquidated becomes greater.



**Interest Rate Model**

1\. Annualized interest rate

Interest is calculated in units of time based on a block of 3 seconds.

Annualized interest rate = interest rate per block\*10512000

Interest rate per block = annualized rate/blocks Per Year

Blocks Per Year = 10512000 = 60/3\*60\*24\*365

2\. Utilization rate

Utilization rate = total borrowings / (pool balance + total borrowings - reserves)

3\. Borrowing Rate

When utilization rate <= marginal interest rate (90%).

Borrowing rate = base rate + utilization rate \* utilization rate multiplier

When the utilization rate > marginal interest rate (90%).

Borrowing Rate = Base Rate + Utilization Rate \* Utilization Rate Multiplier + Marginal Rate \* Marginal Rate Multiplier

4、Deposit rate

Deposit rate = base rate + deposit subsidy rate + utilization rate \* utilization rate multiplier



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