Thread by @0xarc_io

🚀 This is how you unlock 100% LTV on your ETH collateral!

Users who grow their #DeFiCreditScore through responsible borrowing will unlock greater capital efficiency. Meaning those with a credit score of 999 will have access to 100% maximum LTV loans on their collateral.

🧠 How did we achieve this?

This is primarily achieved by mapping the #DeFiCreditScore (a value between 0 and 999) with a range of maximum LTV ratios for each vault.

🏗 The vault design

To support this, we implemented a three-tiered vault design, with each collateral asset having three distinct vault options.

🎯 Score threshold = minimum score to access
💵 Capital efficiency = max LTV offered
💳 Credit limit = max amount of debt available

💵 Capital efficiency

The range of max LTV ratios that the vault offers depends on the borrower’s #DeFiCreditScore. For example, a borrower with a score of 0 will have their position in the WETH-A vault liquidated at a max-LTV of 80%.

While a borrower with a score of 999 will be liquidated in the same vault at a max-LTV of 90%. Because the #DeFiCreditScore changes daily, so too will a borrower’s maximum LTV offered across different vaults.

Users wanting to unlock 100% LTV will have to grow their credit score to 999. This is achieved by avoiding liquidations and showing sensible risk tolerance.

🎯 Score thresholds

Prevent access to higher-tiered (i.e. more capital efficient) vaults until the borrower achieves the minimum #DeFiCreditScore required. By default, everyone has access to the “A” vault, as it has a score threshold of 0.

Vaults B and C offer comparatively higher max LTVs, and are gated to lower-risk borrowers who achieve Credit Scores above the thresholds set. Should a borrower’s Score fall below the threshold, they'll be unable to borrow more until their score returns to the required level.

💳 Credit limits

This creates a ceiling on the amount of debt that an individual can borrow from a specific vault. Rather than allowing a user to borrow an unlimited amount, the credit limit provides a way to limit the quantum of losses born through unprofitable liquidations,

particularly for higher-tiered vaults. To more explicitly tie borrower behaviour with the amount of debt we feel comfortable extending, credit limits for an individual vault can be determined dynamically based on the amount a user has borrowed in other vaults.

🚀 Access 100% LTV Loans

If you want to improve your capital efficiency and unlock 100% LTV loans, join the ARCx Credit waitlist👉🏼 arcx.money