How Lending Works

Omneon's lending mechanism is designed for simplicity and security, using a pool-based model where lenders earn interest and borrowers access liquidity.

💰 For Lenders (Suppliers)

Supply Process

  1. Deposit Assets: Supply vUSD to the lending pool

  2. Receive Share Tokens: Get interest-bearing tokens representing your position

  3. Earn Interest: Automatically accrue interest based on pool utilization

  4. Stake for Rewards: Optionally stake share tokens to earn OMNEON tokens

Share Token System

Your Share = (Supplied Amount / Total Pool) × Total Shares

Interest Earnings = Share Value Appreciation Over Time

Example:

  • Supply 1,000 vUSD when pool has 10,000 vUSD total

  • Receive 10% of total share tokens

  • Earn 10% of all interest generated by the pool

Withdrawal

  • Instant: Withdraw anytime if liquidity available

  • Pro-rata: Receive proportional share of pool + accrued interest

  • No Lock-up: No minimum holding period required

🏦 For Borrowers

Collateralized Borrowing

  1. Lock Collateral: Deposit IOTA as collateral

  2. Borrow Assets: Receive vUSD up to 75% of collateral value

  3. Pay Interest: Accrues automatically based on time and rate

  4. Maintain Health: Keep collateral ratio above liquidation threshold

Loan-to-Value (LTV) Rules

Maximum LTV = 75%
Liquidation Threshold = 80%
Safety Buffer = 5%

Example:

  • Lock $1,000 worth of IOTA

  • Borrow up to $750 vUSD (75% LTV)

  • Liquidation risk starts at $800 collateral value (80%)

Health Factor

Your position health is calculated as:

Health Factor = (Collateral Value × Liquidation Threshold) ÷ Total Debt

Safe: > 2.0
Caution: 1.2 - 2.0  
Risk: 1.0 - 1.2
Liquidation: < 1.0

🔄 Pool Mechanics

Interest Accumulation

Pool Interest = Borrowers' Interest Payments
Reserve Factor = 25% (goes to protocol treasury)
Lender Share = 75% (distributed to all lenders)

Utilization-Based Pricing

Utilization = Total Borrowed ÷ Total Supplied

Higher Utilization → Higher Interest Rates
Lower Utilization → Lower Interest Rates

📊 Real-Time Updates

Continuous Accrual

  • Interest accrues every second

  • Rates update with each transaction

  • Prices update via Pyth Oracle

  • Health factors recalculate automatically

Price Feed Integration

  • Oracle: Pyth Network IOTA/USD feed

  • Update Frequency: Real-time price updates

  • Fallback: Admin override for emergencies

  • Validation: Multi-source price verification

Example User Journey

Lender Example

1. Supply 10,000 vUSD
2. Receive share tokens
3. Pool utilization: 60%
4. Earn 8% APY automatically
5. Stake shares → earn additional OMNEON tokens
6. Total return: 8% + staking rewards

Borrower Example

1. Lock $2,000 IOTA as collateral
2. Borrow $1,400 vUSD (70% LTV)
3. Health factor: 1.43 (safe)
4. Pay 12% APR on borrowed amount
5. Use vUSD for other opportunities
6. Repay to unlock collateral
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