Overview
In DeFi, Exactly protocol adopts a novel strategy for interest rate discovery. It looks at the usage rate of several maturity pools instead of depending on the value of different maturity tokens, allowing users to offer both variable and fixed rates inside the same protocol.
Exactly is an open-source, decentralized, non-custodial protocol that allows users to easily exchange the time value of their cryptocurrency assets at variable and fixed interest rates for the first time in DeFi. It does this by giving lenders and borrowers access to an autonomous interest rate market and setting interest rates based on credit supply and demand.
What is Exactly Protocol?
With Exactly, users can now easily exchange the time value of their cryptocurrency assets at both variable and fixed interest rates for the initial time in DeFi. Exactly is a new decentralized, unsupervised, and open-source protocol that offers a decentralized rate of interest market to lenders and borrowers whilst setting interest rates according to credit supply and demand.
Why does Exactly matter?
Through the use of the ERC-4626 and an entirely novel interest rate model with an ongoing and distinct (non-linear) function, the protocol’s creative approach enables users to lend and borrow resources at fixed and variable rates more effectively. This will lay the groundwork for the growth of a fixed income derived market.
The Exactly value proposition:
Simpleness: Traders may protect the interest rate risk for their either short or long positions, with or without leverage, by trading among fixed and variable rates for different periods of time.
Frictionless: Both variable and fixed deposit rates are available to investors and DAOs. End customers can confidently take out fixed-rate loans for longer periods of time.
Efficiency: The Utilization Rate of each Fixed Rate Pool is a new method for multiple interest rate discovery, and fixed and variable interest rates coexist in the same protocol.
With Exactly, the DeFi ecosystem was completed and the credit market was decentralized since it is an open-source, non-custodial, autonomous interest rate protocol.
The Variable Rate Pool: What Is It on Exactly Protocol?
There is just one kind of asset in the Variable Rate Pool, and it has no expiration date.
When deposits are not enough to cover the desired amounts, this pool supplies liquidity to all the various fixed-rate pools so they may continue to meet demand for new loans. A small portion of the interest fees are retained by the Variable Rate Pool as earnings for initially providing early liquidity, and are immediately replaced when a new deposit is made in a Fixed Rate Pool.
What is a “exaVoucher”?
Users can offer their assets and boost the liquidity of the Variable Rate Pool, which will, in turn, give liquidity to all the different Fixed Rate Pools as needed. The user will receive an ERC-4626 compliant “Exactly Voucher” (exaVoucher) after every deposit, serving as a voucher for the amount deposited. When these exaVouchers are withdrawn and exchanged back for the underlying assets, their value will rise, resulting in periodic variable earnings. It is important to note that the exaVoucher expands on the ERC-20 standard by being exchangeable, which adds composability across other protocols, even though the primary objective is to address the issue of fragmented liquidity across various Fixed Rate Pools.
What is fixed rate pool?
A fixed rate pool is an asset-only pool with a single asset type and a maturity date (term horizon). Once users have placed collateral on the Variable Rate Pool, they can provide or borrow assets from these pools. With every new deposit, the liquidity for that particular Fixed Rate Pool rises, which lowers the utilization rate and fixed interest rate for new loans.
How to borrow an asset on Exactly Protocol?
In order to borrow an asset through the protocol, you must first deposit the asset in the Variable Rate Pool, enable it as collateral on your dashboard, and then select whether you want to borrow the asset at a variable or fixed interest rate.
The health factor: what is it?
The risk-adjusted percentage of deposited collateral divided by the risk-adjusted amount borrowed is known as the “health factor,” and it indicates how “safe” your leverage portfolio is. If the health factor is less than 1x, there will be a deficiency and it will be subject to liquidation.