Protocol Mechanics

Loan-to-values

There are 2 key risk parameters you should care about when it comes working with the protocol: Initial Loan-to-Value (Initial LTV) and Critical LTV.

At any point in time, you can borrow a total of Initial LTV * Value of Deposits ($).

You can withdraw assets from the protocol as long as Current Loan-to-Value of the portfolio is less than or equal to Initial LTV.

If Current LTV is higher than Critical LTV, the account is capable of being liquidated. Anyone can trigger and act as liquidator (taking over the account in breach in full).

Interest rates

Oxygen Light works in a similar way to other algo-driven liquidity protocols. The interest rate is a function of the utilisation ratio: total borrowed by all users divided by total deposits of all users for a given asset type. The interest rate will increase slowly approaching the utilisation ratio but will increase rapidly above that to encourage the market to deposit more funds.

Liquidity risk (inability to withdraw deposited assets) materialises when utilisation is high, and it becomes more problematic as U gets closer to 100%. To manage the risk, the interest rate curve is split in two parts around an optimal utilisation rate U_optimal. Before U_optimal the Interest rate is small, after it starts rising sharply.

The interest rate Rt follows the model:

Yield payments

Yield is computed and paid continuously on your deposited assets every [60] second, interest rates recalculate based on the current utilization rate for every asset in the protocol. Yield is added directly to your deposited assets.

Borrow payments

Interest is added to your borrows. Please monitor borrow interest rates as they recalculate based on pool utilization, and may change every 60 seconds.

Protocol fees

At this moment the Protocol doesn’t charge any operating fees.

SOL network fees

These fees compensate the validator network for the CPU/GPU and network resources necessary to process the state transaction. Transaction fees are extremely cheap (currently 0.000005 SOL).

Risk parameters

These parameters are set with protocol health in mind. OXY token holders may decide to amend parameters of the protocol to adjust for extreme volatility environment.

Why do I see <0.000001 in the Borrowed column after the full repayment of the loan?

When you Deposit or Borrow your assets, the OXY_Lite protocol takes them to work and updates the data every second. An increase in income or debt in such a short period of time can be a very small amount. However, each coin used in the OXY_Lite protocol has a minimum value below which a transfer cannot be made. These restrictions are caused by the fundamental structure of the blockchain and are the same for all market participants. In order to calculate interest more accurately the OXY_Lite protocol works with 12 digit precision, however the Solana blockchain only supports 6 or 9 (for SOL) digits. If, after the full repayment of the loan, you see that the balance of the debt looks like this <0.000001, for example, this means that the amount is lower than the minimum possible in the Solana network.