Hoo Research | Coin Wave Production — Bastion: Decentralized lending protocol
Introduction to Bastion
Bastion is a decentralized lending protocol that sets interest rates through a supply-demand algorithm. This protocol is based on Compound and established on Aurora, an EVM compatibility layer of NEAR.
1. Mortgage and Borrow Assets
To borrow assets, the user should first connect his wallet and mortgage his assets, such as NEAR and USDC. The user can withdraw these assets on the precondition that they are not used as collateral and the withdrawal of these assets will not result in account liquidation.
2. To obtain interests
Once the mortgage is successfully achieved, the interest will accrue with time. The user will receive collateral tokens (cTokens) in his wallet, such as cNEAR, cETH, and cUSDC. Besides, the interest rate of the annual percentage yields (APY) will be adjusted through the supply-demand algorithm.
1. BSTN Token
As Bastion’s governance token, BSTN is essentially the receipt obtained when the user deposits his tokens. BSTN token is used to guide lending and borrowing demands and stabilize the initial deposit interest rate. There are 5 billion BSTN tokens in total, and 30% are distributed in the form of liquidity mining. The lock-up period of tokens held by the team, advisors, and investors lasts over 6 months.
2. Algorithm Model of the Interest Rate
The interest rate is determined by the utilization rate: The percentage of total borrowed assets to the total deposited assets in a specific market. The interest rate increases as the utilization rate rises. This self-balance mechanism encourages users to deposit more assets and maintain the protocol’s repayment capacity.
3. Oracle Machine
Bastion integrates with Flux Protocol to provide borrowing protocol on Aurora with information concerning the oracle machine’s price. The oracle machine is a vital component of any borrowing protocol because having real-time price feedback in the smart contract is crucial for the algorithm and accuracy of calculating the interest rate.
The initial price information being launched covers ETH, NEAR, WBTC, AR, DAI, USDC, and USDT. In addition, Bastion will launch extra price feeds through Flux to support Aurora’s future growth.
Investing institutions include ParaFi Capital, Jane Street, Digital Currency Group, Crypto.com, CMS, and Manifold Trading. Individual investors comprise NEAR’s founders, including Illia Polosukhin, 0xMaki, and Darren Lau, and Redacted Cartel’s founder, 0xSami.