The WING incentives for the NFT Pool will be further distributed to Borrow Pool, Supply Pool (which only supplies ETH right now) and Insurance Pool (which only insures pWING right now) with below ratios:
Then, the incentives will be distributed to a user’s wallet address based on the ratio of the total assets of the wallet address in the pool to the total assets of the pool.
Let's go through an example：
Say the WING distribution rate of the NFT Pool is 259.2 WING/day, and there are three addresses in the pool with the asset values listed below:
First, we calculate the pWING incentives amount distributed to each pool:
Then we calculate the pWING distributed to each address:
Suppliers can earn ETH interest from borrowers, and pWING incentives by providing the liquidity to the pool. Currently, only ETH assets are supported.
Borrowers can earn the pWING incentives but pay interest by borrowing assets. There are three steps borrowers may go through：
- 1.Collateralize own blue chip NFT.
- 2.Borrow ETH from the asset pool and earn pWING incentives.
- 3.Repay all the loans and interests to get collateralized NFT back.
Each NFT has its Collateral Factor which determines the maximum amount that users can borrow after collateralizing NFT. The maximum amount = NFT’s floor price* Collateral Factor. Check here for each NFT’s Collateral Factor.
Insurers can earn pWING incentives by insuring pWING to the insurance pool.
The interest rate model will consider a two-step interest rate model setting, which will be adjusted according to the utilization rate of funds and the level of liquidity.
Parameters in the Interest Rate Model:
- Utilization Rate U=Total Borrow/Total Supply
- Total Borrow: Total ETH value borrowed in Wing NFT Pool
- Total Supply: Total ETH value supplied in Wing NFT Pool = Total Borrow +ETH Liquidity
The Interest Rate Model is:
Optimal Utilization Rate: Uk Base rate: R0 The interest rate corresponding to the optimal capital utilization rate: Rk The interest rate when the capital utilization is 100% minus R0 and Rk: R100 Utilization rate: U Reserve Factor: r
- If U<Uk, Borrow APR=R0+U/Uk∗Rk
- If U≥Uk, Borrow APR=R0+Rk+(U−Uk)/(1−Uk)∗R100
- Supply APR= Borrow APRU (1-r)
Example 1: If an address has supplied $100 ETH, after which the total supply is $1,000 ETH. The total borrow is $300 ETH.
Example 2: If an address has supplied $100 ETH, after which the total supply is $1,000 ETH. The total borrow is $800 ETH.
To protect the interests of the borrowers, when a borrower’s Risk Factor is above the liquidation protection line, which is currently 80%. The borrower will have 24 hours to repay and/or replenish ETH, so as to protect the collateralized NFT from liquidation. If the borrower is unable to replenish ETH and/or repay the loan within 24 hours, the NFT loan agreement will enter the direct liquidation period, and the NFT will be liquidated immediately.
If the NFT price rises during the liquidation protection period and Risk Factor drops below 80%, NFT will automatically exit the liquidation process.
Bidders can participate in bids that are valid for a price greater than 80% of the current NFT floor price and not less than the total amount of debt.
During the auction, if the bidders have made bids, and the borrower has made direct repayment to take back NFT. The borrower has to pay an additional 1% of the total amount of debt to the highest bidder as a replenishment. (Note: Borrowers do not need to pay the replenishment if NFT prices recover.）
When the Risk Factor is between 80% and 90% and no bidders, or when the Risk Factor is directly above 90%, the funds of the insurance pool will liquidate the NFT. The liquidation price is the total amount of debt corresponding to NFT (usually lower than the floor price of the NFT series).
Wing NFT pool uses the floor price of each NFT collection from OpenSea and LooksRare as data of price feeding for NFT collateral. Protocol calculates time-weighted average price (TWAP) of floor price from OpenSea and LooksRare marketplace. Wing oracle design and running mechanism:
- 1.The off-chain node obtains the latest floor price of NFTs from OpenSea and LooksRare；
- 2.Calculate the weight average floor price of OpenSea and LooksRare；
- 3.Compare the difference between the price on the chain and the latest floor price to determine whether the floor price needs to be uploaded to the chain；
- 4.Call the contract interface to upload the floor price to the on-chain contract and calculate the TWAP on-chain to weight the floor price, ensuring the price is reasonable；
- 5.The TWAP algorithm is open sourced on the on-chain contract, and everyone can verify the validity of the data.