Case Study A: mETH/USDT
SUMMARY
A simplified case of one lending and borrowing intent each with mETH as collateral and USDT as the supplied asset.
Follow through this case to understand how lending, and borrowing works in MethLab. In this simplified case, the Intent Space is made up of only two intents that get matched.
Lender A: Intent Specs
| Parameter | Value |
|---|---|
| Collateral Asset | mETH |
| Supply Asset | USDT |
| Strike Price | 1475.75 USDT |
| Reserve Price | 1500 USDT |
| Interest Rate(r) | 20% pa |
| Term(t) | 30 days |
Borrower A: Intent Specs
| Parameter | Value |
|---|---|
| Collateral Asset | mETH |
| Borrowed Asset | USDT |
| Collateral Amount | 1 mETH |
| Borrow Amount | 1475.75 USDT |
| Interest Rate(r) | 20% pa |
| Term(t) | 30 days |
Once these Intents are matched, a Loan contract is created.
Loan Contract
| Parameter | Value |
|---|---|
| Escrowed Asset | 1 mETH |
| Repayment Date | 30 days from matching |
| Total Repayment | 1500 USDT |
| Borrowed Asset | 1475.75 USDT |
Borrow Amount(Strike Price) Calculation
Borrow amount(Strike Price) is what the borrower receives by escrowing 1 mETH as Collateral according to the Lender A intent. Borrower A has to repay 24.25 USDT as interest.
What can the borrower do?
- Repay (partial/full): Borrower can repay anytime before the term ends in part or in full. If the borrower repays in part, borrower can claim collateral back in pro-rata share of full repayment amount. Eg. If the borrower repays 750 USDT, borrower can unlock 0.5 mETH.
The borrower can repay anytime to unlock full collateral by paying total interest due. Borrower may also choose to not repay at the cost of forfeiting the escrowed collateral of 1 mETH.
Leverage: Borrower can swap borrowed USDT for mETH to borrow again from the protocol. MethLab natively provides leverage through the use of a DEX eliminating the need of manual looping.