Themis Protocol is a decentralized, multi-chain supported Peer-to-Pool lending & borrowing platform. It varies most from non-custodial liquidity protocols in that users can not only engage as suppliers or borrowers to supply liquidity and receive passive income but also their idle funds can be loaned directly to collateral holders with LPs, establishing a new money market.
Themis 2.0 sets out with the vision of supporting and enabling yield-bearing assets on chain to find ways to be collateralized. This vision will create a more dynamic and efficient lending and borrowing market while enhancing on-chain liquidity. With our new architecture, liquidity providers on our protocol will get higher yields as the efficiency of our liquidity increases.
The design principles are:
- A non-custody liquidity structure: Enabling blue-chip ERC20 collateral lending & borrowing and ensuring underlying liquidity supply.
- Capital efficiency: Allowing for more efficient use of funds between collateralizing of similar type assets.
- Risk Isolated: Further segmentation of liquid pool assets to isolate risk and enable matching of sub-asset lending & borrowing needs.
- Scaleable: Compatible with multiple standards of assets and protocols.
As the name suggests, M0 is a money market environment. The goal of M0 is to create pools with extremely liquid assets. Users can participate as both suppliers or borrowers. Suppliers provide liquidity to the market to earn passive income, while borrowers are able to borrow as either overcollateralized (in perpetuity) or undercollateralized (a single block of liquidity). Since borrowers must deposit more assets, liquidity is often deep and idle.
M0 has the following features:
- Passive interest income is earned on assets supplied by the user, which can also be over-collateralized and borrowed against other assets.
- The sum of the collateral values between different deposited assets of the user can be used as MaxLTV
- Users can collateralize and borrow multiple assets.
- The account will be in liquidation when the value of the user's borrowed assets or collateralized assets reaches the liquidation threshold.
- When E-Mode is turned on, the collateralization rate and liquidation risk are recalculated. Only specific assets can be considered as collaterals, and the user can only borrow specific assets.
- Different interest rate models are applied to different tokens. And the interest rate is controlled by an algorithm to ensure a certain level of liquidity.
The goal of M1 is to accommodate more liquid assets for yield-bearing assets to be collateralized. The activity of M1 will make M0 funds more efficient, increasing the potential yield of M0 suppliers and providing more efficiency to LPers.
For improving the liquidity of M1, risk considerations are as follows：
- Risk segregation policy: when a user collateralizes one sub-asset, only one asset can be borrowed.
- Flexible position adjustments: some sub-assets can be subject to four acts of deposit/withdrawal/borrowing/repayment for position adjustment to avoid being liquidated.
- Automatic E-Mode: when the user's collateral is a stablecoin in the E-Mode list, E-Mode will be automatically enabled when borrowing assets. It's estimated on the premise that a higher collateral rate is used when the user collateralizes their assets.
- Global Borrowing Limit: The protocol has a global borrowing limit for the total assets borrowed by sub-assets. When sub-asset A exceeds the borrowing limit for asset B in the lending pool, then collateral A borrowing to asset B will be blocked.
Themis 2.0 uses a more mainstream Oracle for price feeding; Chainlink's Price feed to feed assets and monitor asset prices in real time. Some sub-assets may use Chainlink + Uniswap TWAPs hybrid oracle. The role of the oracle is to calculate the stability of the value of the user's collateralized assets and to trigger liquidation.
- M0 assets get price fed directly by Chainlink.
- M1's collateral assets are tracked by the on-chain quantity of the underlying asset before being fed price through Chainlink.
- All feeds are tracked in real-time, ensuring that risky assets can be dealt with in a timely manner in the event of price fluctuations.
The liquidation logic of M0 and M1 is similar, however the liquidation chain is different.
- The liquidator invokes the liquidation interface to help the debtor repay and receives the liquidated underlying asset as compensation.
- M0 after triggering liquidation, the liquidator receives the liquidation reward of the liquidated underlying asset. And the remaining assets that have not been liquidated are returned to the liquidated person.
- M1 upon triggering liquidation, the liquidator will receive the liquidated underlying asset directly.
- The liquidator can call Flashloan
Users receive certain rewards for using Themis Protocol. These rewards encompass Themis itself, including rewards obtained from third parties, received from M1.
In risk management, Themis follows the basic principle of security over liquidity over profitability.
- Security: Themis works closely with world-renowned code security companies to ensure that there are no gaps in the technical aspects of our implementation. We also keep an eye on technology upgrades and updates.
- Liquidity: As a lending platform, Themis' business is designed to prioritize the liquidity of assets. Overcollateralization and algorithmic interest rates are designed to ensure that assets have good liquidity, and the liquidity scale of collateralized assets is given priority in reviewing assets.
- Profitability: The algorithm-controlled debt Tokens are balanced at all times. The proceeds earned by users are not falsely recorded. All earnings prior to the deactivation of Themis are settled by the smart contract.