An Introduction To Bank Of Cronos Loans.
This post provides a brief overview and breakdown of the BOC Loans protocol, the latest innovative decentralized borrowing protocol that allows you to draw interest-free loans against Cronos assets used as collateral. Loans are paid out in CUSD also known as Cronos-USD (a USD pegged stablecoin) and need to maintain a minimum collateral ratio of 110%. In addition to the collateral, the loans are secured by a Stability Pool containing CUSD and by fellow participants collectively acting as guarantors of last resort. To be more specific, the BOC Loans Protocol is a collateralized debt platform. Users can lock up Cronos assets, and issue stablecoin tokens (CUSD) to their own Cronos address, and subsequently transfer those tokens to any other Cronos address. The individual collateralized debt positions are called Loans.
All CUSD stablecoin tokens are economically geared towards maintaining value of 1 CUSD = $1 USD, due to the following properties:
We have designed an ever-consistent over-collateralized system wherein the dollar value of the locked Cronos assets exceeds the dollar value of the issued stablecoins
The stablecoins are made to be fully redeemable as users can always swap $x worth of CUSD for $x worth of CRO (or wETH/wBTC) directly with the system (including protocol fees).
The system algorithmically controls the generation of CUSD through a variable issuance fee.
After opening a Loans with some CRO, users may issue (or “borrow”) tokens such that the collateralization ratio of their Loans remains above 110%. A user with $1000 worth of CRO in a Loans can issue up to 909.09 CUSD. Anyone with a Cronos address can send or receive CUSD tokens as they are freely exchangeable regardless of whether the sender or receiver has an open Loans or not. The tokens are burned upon repayment of a Loan’s debt.
The BOC Loans Protocol regularly updates the CRO:USD price via a decentralized data feed (Price Oracle). When a loan falls below a minimum collateralization ratio (MCR) of 110%, it is considered under-collateralized, and is vulnerable to liquidation.
As stable-value assets continue to demonstrate their necessity and essential quality as building blocks for decentralized applications, they have grown to represent millions and billions of dollars in value. The prevailing issue however is that the vast majority of this value is represented in the form of centralized fiat-collateralized stablecoins. The BOC Loans Protocol was created to provide a more capital efficient and user-focused way to borrow stablecoins and help Cronos users make the most of their Cronos assets.
More info and documentation about liquidations, tokenomics, liquidity incentives and more are coming soon in the days/weeks ahead so stay tuned and follow all of our social platforms. The BOC core team would like the thank our ever growing community for their continued support and input as we hope to continue to grow and work with the community members as we embark to the next phases of the protocol. Our vision hopes to see a fully decentralized DAO which manages, develops and legitimizes Bank of Cronos.
Authored By: NewageSage
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