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Clearpool: Sustainable yield on the bear market
Clearpool is a decentralized lending protocol that provides institutions with access to a decentralized network and facilitates the issuance of unsecured loans. Clearpool belongs to the growing class of CEDEFI protocols. They integrate the functions of CEFI and Defi, which help financial institutions and market makers gain access to Defi liquidity, increasing the efficiency of capital use.
Clearpool V2 protocol was launched in March 2022 and is currently working on Ethereum and Polygon.
Team and sponsors
Clearpool was founded Robert Alcorne, Alesio Quaglini and Jacob Kronbichler. All of them have extensive experience in traditional finance, fintech and industries related to blockchain.
In September 2022, Clearpool closed the initial round of $ 3 million with investors such as Arrington XRP Capital, Sequoia Capital India, Wintermute and Huobi Ventures.
How Clearpool works
As in the case of any lending protocol, two key participants are creditors and borrowers. Borrowers should be in the bulletman of the protocol before they can create liquidity pools, which are then filled with creditors. Lenders receive a interest rate with a correction for risk in exchange for the provision of liquidity of the pool.
Unlike borrowers who should get into the Whitalist, before they can interact with the protocol, it is not necessary to do this to creditors. They can apply liquidity to any of the liquidity bullets if they have a supported wallet. Liquidity bullets do not have restrictions on liquidity volume that creditors can provide. This allows borrowers to optimize the size of the pool through the use of a curve of interest rates.
Creditors receive CPTOKEN, which displays their share of liquidity in a certain pool (each pool has its own CPTOken). For example, if a user A enters the USDC into the Amber Group liquidity pool, he will receive in return tokens CPamb-USDC. CPToken charges the interest rate of the pool for each block and displays the riskiness of the position of the borrower of the pool. This loan tokenization allows you to create future Defi products over Clearpool, providing creditors with more opportunities in terms of risk and hedging management (more about this later).
All borrowers must undergo checks KYC, AML and check of credit risk from Credora. The assessment of credit risk is determined using Zero Knowledge technology to calculate the credit risks of borrowers in real time while maintaining confidentiality.
Having got into the Whitealist, borrowers must pay the commission by covering CPool, Clearpool control token before they can launch a liquidity pool. This board is the smallest of two:
- 1% of the medium -sized pool of all current bullets, or
- 0.5% of the maximum position of the borrower determined by Credora
Borrowers can also request a KYC inspection from creditors, thus creating an affordable pool, which has a fixed validity period, interest rate and a CPool remuneration plan. Lenders interested in accessible pools must request access until the necessary checks KYC and AML.
Each pool of borrowers is insured by an insurance account, to which 5% of the pool is transferred. In the case of default, the owners of CPTOken (lenders) may require insurance (more about this later). When the pool is closed, the assets on the insurance account are transferred to the protocol revenue pool.
The income from the protocol also includes a percentage (currently 5%) from the pool, which is charged for each block. Please note that, unlike the insurance account, which depends on a particular pool, the income is transferred from each pool of borrowers to a single income pool. The income pool is used for the quarterly ransom of CPool in the open market, the percentage of which is sent to the remuneration pool, and the rest is burned. At the time of writing, a total of $ 95,638 was used for ransom.
The percentage rates of the pool are determined by demand and supply. So they stimulate creditors who retain funds in the bullet, when their use is below optimal, at the same time preventing the use of the pool by borrowers in lower and extreme ranges. For example, if borrowers need more capital, they can simply increase the use of the pool by increasing the interest rate and attracting more capital in the pool. Thus, higher use (higher interest rate) attracts more liquidity, while lower use (lower interest rate) prevents liquidity.
Clearpool smart contracts are designed to protect both borrowers and creditors. They minimize credit risk. If the load of the pool reaches 95%, borrowers will not be able to withdraw liquidity, and interest will continue to accrue and increase the use coefficient. If the use coefficient reaches 99%, neither borrowers, nor lenders can take any liquidity, and borrowers are given 120 hours to reduce the use factor to 95% by repaying the loan.
Failure to fulfill this requirement leads to the default of the pool, which launches an auction that allows participants to offer the price for the CPTOken pool (pool debt). There may be individuals or legal participants, but they must be included in the Whitalist. While the pool borrowers cannot participate in the auction. The amount in the insurance account determines the minimum rate. As soon as the auction ends, the voting process will begin, allowing the owners of CPTOken to accept or reject the application:
- If the application is rejected, each owner of CPTOken will be able to redeem his tokens for the proportional share of the pool insurance account and maintain his rights to the legal persecution of an insolvent borrower individually.
- If the application is approved, holders will be able to redeem RTOKEN tokens for their share in the victorious application and transfer their rights to the legal persecution of an insolvent borrower to the winning trading participant.
- The tender winner will receive NFT, containing legal rights to the debt of a pool, as well as an exclusive legal right to pursue an insolvent borrower.
To ensure the security of the protocol, Pessimistic audits were carried out (one) (2) (3) and Certik. There is also a rewarding program for detecting errors. Such a contribution is estimated by USDC or CPool based on the level of vulnerability, however, the minimum payment is $ 500.
CPool is a service token and Clearpool management token, the total offer of which is 1 billion. Tokens are distributed as follows:
- Initial round – 3.33% of the supply; 12 months of linear sanking
- Private round – 9% of the offer; 3 months Clifi 12 months linear Vesting
- Public round – 0.45% of the offer; 50% is unlocked at launch, 50% Условия использования after 6 months
- Team – 15% of the offer; 6 months Clif and 24 months linear Vesting
- Treasury – 72.3%
The treasury of the protocol is divided into five divisions: ecosystem (14%), partnerships (13.8%), remuneration (27.7%), liquidity (20.7%) and reserves (23.7%). According to Coingecko, Currently, more than 296 million tokens are in circulation. When trading CPools at a price of $ 0.10, this gives the protocol a market capitalization of ~ 32 million dollars and FDV ~ 100 million dollars.
At the time of writing, the Clearpool has about 92.8 million dollars in TVL on Ethereum and Polygon.
Source: @davy42, via dune
Despite the fall of TVL after the May and June failures, in July liquidity and demand for borrowing began to return to the protocol. This happened thanks to the launch of their pools on Polygon, where an average of 80-85% of use was supported.
Capool owners are currently not obtaining a share of income from the protocol, but this will change in the 1st quarter of 2023, while it will increase from 10% to 50%. The income from the protocol is 5% of all interest rates of the liquidity pool, and at the time of writing the article, the protocol brought 192,234 dollars of income from the protocol. The rest of the income goes to creditors who have raised more than ~ 3 million dollars of interest payments from the date of launch of Clearpool. Thus, users who want to receive a higher share of income and take a higher risk can consider participating as creditors.
Source: @davy42, via dune
As of October 18, 2022, Clearpool has about 500 active creditors, ~ 70% of which are on Polygon.
Source: @Octavionotpunk, via Dune
Although this year Clearpool issued loans in the amount of ~ 340 million dollars, they are significantly lagging behind the leaders of the Truefi market (~ 1.7 billion dollars) and Maple Finance (~ 1.8 billion dollars).
Although the bear market continues without any signs of weakening, the demand for unsecured loans has restored. This indicates the effectiveness of Defi lending, since marketmers can increase their capital efficiency to continue market operations. However, lending without security is associated with its risks, regardless of how high the credit rating of the borrower is.
Clearpool insurance mechanism needs to be improved, since 5%accrued to the pool insurance fund is not enough. In a pool with the highest coverage, only ~ 0.25% of its means is covered. For comparison, the coating of the main debt of Maple on loans is about 6-7% for each of the pools.
Unsecute lending is characterized by one of the highest profitability indicators in Defi-crediting. However, you always need to remember the risk, since it remains significant due to the high volatility of the market, which is even more aggravated by macroeconomic conditions. Nevertheless, Clearpool (and Defi sector as a whole) demonstrates growth prospects, since it survived, despite the current market conditions.
Warning: Bybit employees can be involved in some or all tokens and projects mentioned in the article. This statement prevents any conflict of interests and is not a recommendation to purchase any token or participate in any of the mentioned ecosystems. This content is intended exclusively for introductory purposes and should not be accepted as an investment council. Please study this issue well and be careful if you plan to participate in any of these projects. The opinion expressed in this article belongs to the author (am) and does not reflect the views of Bybit.