Thread by @Cov_duk

#THORFi is coming ⚡️

Here's your breakdown of lending, borrowing & saving on THORFi.

A thread🧵👇

2. Lending.
Users can borrow in THOR.USD by depositing collateral.

Collateral is in LP units of the primary asset of any chain. In other words, it will be in the units of ETH not ERC20s.

This makes the pools deeper and drives $RUNE price up.

3. Borrowers pay 0% interest. This is BIG. The way this works is, borrowers forego yield on their collateral and all loans must be open for a minimum of 100 days.

4. The moment the loan is taken, the network records the value of the asset deposited and the rune value of the collateral.

When the loan is repaid, users are given the LP units that equal the deposited value. Any additions are kept by the network.

5. Loans can be closed before the 100 day minimum, but the user has to pay a 1% fee per day early, so you don’t want to be closing it early.

6. Collaterals are not liquidated, even if the collateral drops below debt value.

A borrower is not likely to repay when the debt exceeds the collateral.

The LP units locked remain as a last resort to maintain deep pools.

7. All the collateral is yield producing blue chip assets (like ETH) and all debt is in USD.

Hence, all #THORChain users are long term bullish on crypto and bearish on USD.

USD is reliant on $RUNE, not on the debt collateral.

8. Even when loans cannot be paid back on time, it does not create a problem for #THORChain.

This is because the protocol always gets paid back immediately when the debt is paid out, meaning that it doesn’t care if the loan is repaid or not.

9. When the loan is opened, the lender mints THOR.USD to the borrower.

The added collateral increase the yield of THORSavings, incentivizing users to burn $RUNE and enter THORSavings.

10. The lender, on each loan, mints the debt but the market burns the value of the collateral in $RUNE to get a greater yield.

Thus, every loan actually burns $RUNE and since supply of $RUNE is decreasing with each loan, there is always a profit and unpaid loans do not matter.

11. Savings.

There are two types of savings vaults: USD and Blue chips.

Blue Chip savings earn yield on all debt collateral. ETH collateral is paid to ETH savers and BTC collateral is paid to BTC savers.

12. Here's a cool summary on the economic design:

13. Whenever someone mints THOR.USD, $RUNE supply decreases. $RUNE supply increases when $THOR.USD is minted to provide the borrower with debt.

When a loans is opened, it created demand for ThorSavings because savings yield is increased.

14. #THORFI savings is based on successful lending platforms so we know it works.

15. Here's the full #THORFi economic design docs:
gitlab.com/thorchain/thor…

16. Read my thread on the #THORFi stablecoin here:

https://twitter.com/Cov_duk/status/1505981058881257472

17. #THORChain accounts to follow:
@crypto_stevie @ChadThoreau @ConwellsClub
@JaneDButterfly @THORmaximalist @THORChain
@AkuRypto @itsloganshippy @RuneMaxi @GrassRootsio @crypto_magix @BitStern
@THORWalletDEX @Mastermined710 @THORChadsDAO @0xSmith

RT would mean a lot!

18. #THORChain accounts to follow:
@TheRuneRanger @CBarraford @CryptoVillain_
@Bull_Sander @Asian0xV @TehSlaw @NicolasFlamelX @crypto_magix @RimaSabila @THORChainLPU
@Jatinkkalra @THORNOOBs @runebase_org
@thorstarter @m0nkey_space @Cryptofriendlyy

RT would mean a lot!

19. I hope this was insightful, a retweet would mean a lot!

More #THORFi breakdowns coming your way, follow to keep up.

Here are some of my past threads:
covduk.notion.site/4798517af2944e…