LogoLogo
  • Introduction
    • Mortgage product
    • Earn product
    • NEW! Refinance
  • How MortgageFi Works
    • Mortgage borrowers
      • Early repayment feature (ERF)
    • Earn - Liquidity Providers
    • Refinancing
  • Getting Started
    • Components
      • Mortgage Vaults
      • Earning Vaults
      • Loan NFTs
      • Defaults
      • ERC20 Integration
    • Points system
      • Liquidity Incentives
      • Referral Incentives
  • FAQ
    • General
  • MortgageFi Ecosystem
    • Contracts
    • Audits
    • Governance Structure
    • Integrate your own token
      • Integration Process
      • Benefits of Integration
      • Considerations
      • How to apply
    • Self-Balancing Protocol
      • Three Pillars
      • Protocol Design
      • How the System Balances
      • Security and Attack Vectors
      • Advantages of This Model
  • Under-Collateralized Loans
    • What are Under-Collateralized Loans?
    • Key Features
    • How it works
    • Risk Management
    • Benefits for Borrowers
  • Compared to other Lending
    • Use Case Example
  • Comparison Examples
    • Funding Rates and Position Stability
    • Zero-Sum Game vs. Mutual Benefit
    • Long-Term Holding vs. Short-Term Trading
    • Risk Profile
    • Costs and Predictability
  • Yield for Earn Vaults
  • Risk Management
    • Risk Management Strategies
    • Risks and Mitigations
    • User Responsibilities
    • Community Risk Management
    • Ongoing Risk Management
  • Strategies
    • Long vs Short-term Strategy
      • Long-term strategy
      • Short-term strategy
      • Comparing the Strategies
    • Hedge against the bear market
    • Cross-Chain Operations
    • Token Sink
Powered by GitBook
On this page
Export as PDF
  1. MortgageFi Ecosystem
  2. Self-Balancing Protocol

Protocol Design

Imagine ETH is trading at $2000 on the open market:

  1. An ERC20 seller offers ETH to MortgageFi at $2020

  2. MortgageFi purchases this ETH using stablecoins from Earn depositors

  3. A borrower, seeing this as attractive, takes a loan for this ETH

  4. The borrower's repayments go to Earn depositors, who supplied the initial stablecoins

  5. If ETH price rises, more borrowers are attracted; if it falls, more sellers are incentivized

  6. The 3-day streaming mechanism ensures that large deposits or sales don't disrupt this balance

By creating this virtuous cycle with built-in security measures, MortgageFi maintains a stable, efficient, and oracle-free ecosystem that benefits all participants while remaining resilient to market fluctuations and potential exploits.

PreviousThree PillarsNextHow the System Balances

Last updated 1 month ago