Onchain interactions with lending pools

This page describes how PMMs may read the state of lending pools and interact with them outside of RFQ flow

Key Concepts

Collateral Collateral is an asset that a borrower provides to the lending pool as security for a loan. It ensures that the lender has protection in case the borrower defaults on the loan. In our lending pool, collateral can be supplied in the form of USDT, USDC, DAI, WETH, wstETH, or wBTC. In Liquorice lending pools, the borrower’s collateral cannot be borrowed. Collateral can be withdrawn for as long as withdrawal does not result in the breach of liquidation threshold.

Debt Debt represents the amount of borrowed funds that a borrower owes to the lending pool. This includes both the principal amount borrowed and any accrued interest. Borrowers must repay their debt to avoid liquidation of their collateral.

LTV The Loan-To-Value ratio is a measure of the borrower’s solvency. It is calculated based on the value of the collateral provided and the amount of debt owed. A higher LTV indicates a higher risk of liquidation for the borrower, while a lower LTV indicates a safer position. Another known measurment of borrower's solvency is health factor which is basically a reversed value of LTV.

How to Supply Collateral into the Pool

To supply collateral into the pool, you can use the supply function of the LendingPool contract. Here is an example:

IERC20(asset).approve(address(lendingPool), amount);
lendingPool.supply(asset, amount, lockedCollateral);

• asset: The address of the asset you want to supply as collateral.

• amount: The amount of the asset you want to supply.

• lockedCollateral: A boolean flag indicating whether the collateral is locked. This flag should always be true because in Liquorice, only locked collateral is considered when calculating the health factor. Interest is earned on regular deposits but such deposits can be used as collateral to improve health factor

How to Repay Debt to the Pool

To repay debt, you can use the repay function of the LendingPool contract. Here is an example:

IERC20(asset).approve(address(lendingPool), amount);
lendingPool.repay(asset, amount);

• asset: The address of the asset you want to use to repay the debt.

• amount: The amount of the asset you want to repay.

How to Determine Maximum Available Borrowing in Each Token

To determine how much you can borrow in each token, use the getAssetAvailableBorrowAmount function of the PoolData contract. Here is an example:

uint256 availableBorrowAmount = poolData.getAssetAvailableBorrowAmount(
    lendingPool,
    user,
    asset
);

• lendingPool: The address of the lending pool from which you wish to borrow.

• user: The address of the user, to take into account their existing collateral and debt.

• asset: The address of the asset you want to borrow.

How to Understand Your Existing Borrowings

In Liquorice Lending Pools, both collateral and debt are tokenized. When you supply an asset as collateral, you receive collateral tokens representing your collateral position. Similarly, when you borrow an asset, you receive debt tokens representing your debt position. These tokens help track and manage your collateral and debt within the pool.

Steps to Get Debt Amount for a Specific Asset:

1. Debt Tokens: Your existing borrowings are represented by debt tokens. Each debt token corresponds to a specific borrowed asset. The balance of these debt tokens indicates the amount of debt you owe.

2. Checking Debt Token Balance: You can check your debt token balance using the balanceOf function of the debt token contract. This balance represents the amount of the borrowed asset you owe, including any accrued interest.

3. Asset State: The LendingPool contract maintains the state of each asset, including the total borrow amount and the debt token associated with the asset. You can retrieve the asset state using the getAssetState function.

4. Calculating Debt Amount: The debt amount can be calculated using the exchange rate between debt shares and the total borrow amount. This exchange rate can be obtained using the getDebtShareToAmountExchangeRate function from the PoolData contract.

Here is an example of how to check your existing borrowings:

LendingPool.AssetState memory assetState = lendingPool.getAssetState(WETH);
uint256 debtTokenBalance = IERC20(address(assetState.debtToken)).balanceOf(borrower);
uint256 totalBorrowAmount = assetState.totalBorrowAmount;
uint256 debtShareToAmountExchangeRate = poolData.getDebtShareToAmountExchangeRate(address(lendingPool), WETH);
uint256 debtAmount = debtTokenBalance * debtShareToAmountExchangeRate / 1e18;

• assetState: The state of the asset you have borrowed.

• debtTokenBalance: The balance of your debt tokens.

• totalBorrowAmount: The total amount of the asset borrowed from the pool.

• debtShareToAmountExchangeRate: The exchange rate between debt shares and the total borrow amount.

• debtAmount: The calculated amount of debt you owe.

By following these steps, you can understand your existing borrowings and manage your debt effectively within the lending pool.

How to Understand LTV

For solvency assessment, we use the LTV (Loan-to-Value) ratio. The LTV ratio represents the ratio of the borrowed amount to the value of the collateral.

The getUserLTV function from the LendingPool contract calculates the current LTV and the liquidation threshold for a given user. Here is an example of how to use this function:

(uint256 userLTV, uint256 liquidationThreshold) =
    lendingPool.getUserLTV(userAddress);

• userAddress: The address of the user whose LTV and liquidation threshold you want to check.

• userLTV: The current LTV of the user.

• liquidationThreshold: The liquidation threshold for the user.

Interpreting userLTV:

• Low LTV: A low LTV ratio indicates that the borrower has a significant amount of collateral relative to their debt. This is a safer position as it reduces the risk of liquidation.

• High LTV: A high LTV ratio indicates that the borrower has a higher amount of debt relative to their collateral. This increases the risk of liquidation if the value of the collateral decreases or if the debt increases due to accrued interest or changes in asset prices.

By using the getUserLTV function, borrowers can monitor their health factor and take necessary actions to maintain a safe position within the lending pool.

Get Interest Paid on an Asset at Any Moment

The interest rate for each asset in the lending pool is calculated using the InterestRateModel contract. The current interest rate can be obtained using the getCurrentInterestRate function.

uint256 currentInterestRate = rateModel.getCurrentInterestRate(
    address(lendingPool),
    asset
);

• lendingPool: The address of the lending pool.

• asset: The address of the asset you want to get interest information about.