Whitepaper

Revolutionising DeFi with a Zilliqa EVM-powered money market protocol

Introduction

Ionise Protocol is designed to enable a complete algorithmic money market protocol on Zilliqa EVM. The Ionise Protocol is designed as a fork of the Venus Protocol (Compound Protocol).

Ionise is currently in an early stage of its ongoing development and new functionality will be steadily built out in future, with added features being subject to the development roadmap and governance decisions.

Mission

We believe that crypto is the future of money and decentralised finance (DeFi) is the future of finance. The Ionise Protocol will play a foundational role in achieving our mission to build the decentralised future of finance.

Background

DeFi is an ecosystem of financial applications built on top of blockchain technology. DeFi protocols offer open-source, transparent, and permissionless financial services to users from any part of the world.

The evolution of decentralised finance has created a diverse financial ecosystem built directly on blockchains, which are transparent/verifiable through cryptography and deterministic code executed through smart contracts. These platforms are redefining the structure of money markets without the need for a central authority or third-party decision-makers.

Ionise is an essential building block for Zilliqa DeFi ecosystem, acting as a foundation for the growth of accessible and powerful DeFi tools on the network.

Key Features

• Borrow cryptocurrencies and stablecoins with no credit check and fast origination directly on Zilliqa.

• Supply cryptocurrencies and stablecoins and earn a variable APY for providing liquidity to the protocol that is secured by over-collateralised assets.

• Decisions on protocol changes are controlled by the Ionise Token (ION).

Protocol Architecture

Ionise is deployed as an EVM-compatible money market protocol that has been designed as a fork codebase of the Venus Protocol.

Controller Contract

The Controller smart contract deployed on Zilliqa EVM is the decentralised version of a processor. This smart contract creates all the interactions between other associated smart contracts. Ionise does not natively support tokens by default. It will rely on specific markets to be whitelisted within the Controller contract. The protocol has the ability to whitelist markets by utilising the “supportMarket” admin function with parameters for address and interest rate models. For an asset to have a functional marketplace, there must be a valid price feed from the Value Oracles alongside a Collateral Factor. Every interaction with the protocol will be verified and validated through the Controller smart contract, which validates liquidity and collateral before a function is executed.

Supplying Assets

Ionise Protocol users may supply various supported cryptocurrencies or digital assets to the platform which can be used as collateral for loans, allowing them to earn an APY for supplying liquidity to the protocol.

Supplying assets such as cryptocurrencies or digital assets to Ionise gives users the ability to participate as a lender while maintaining the security of collateral in the protocol. Users will earn a variable-based interest rate depending on the yield curve utilisation of that specific market. All user assets are pooled into smart contracts so that users can withdraw their supply at any time, given that the protocol balance is positive.

Borrowing Assets

Users who want to borrow any of the supported cryptocurrencies, stablecoins, or digital assets from Ionise must pledge collateral that will be locked on the protocol. These assets must be over-collateralised and will enable up to 80% of that collateral value borrowed. These collateral ratios are determined by the protocol.

Users will have a compound interest rate that will be applied per block on these assets and have no monthly payment obligations. To return the collateral, the user must pay off their origination balance and compounded interest back to the protocol.

Market interest rates are determined by the specific yield curve that is designated in the contract. Depending on the market utilisation, it will determine what the interest rate will be for that specified market.

Liquidations

A user’s collateral may be liquidated if it falls below the thresholds required for the borrow or stablecoin side of a specific coin market. These liquidations are subject to a liquidation fee to satisfy the outstanding debt. The remaining collateral, if any, is then returned to the user. A liquidator can stand to benefit from liquidating a collateralised position.

Reserve Factors

Each supported token contract and underlying collateral will have a reserve factor from a basis of 0-90%. This means there will be reserves that the protocol captures between the spreads of borrowing and supplying. These reserve factors are added to the protocol and can be used for community development, improvements, protections, and more. These reserve factor funds are controlled by the governance process and can be used in a variety of protocol security distributions or rewards mechanisms.

Liquidity

The protocol does not guarantee liquidity. Instead, it relies on the interest rate model to incentivise it. In periods of extreme demand for an asset, the liquidity of the protocol (the tokens available to withdraw or borrow) will decline; when this occurs, interest rates rise, incentivizing supply and disincentivizing borrowing.

Oracles

A price oracle maintains the current exchange rate of each supported asset, and the protocol delegates the ability to set the value of assets to a committee that pools prices. These exchange rates are used to determine borrowing capacity and collateral requirements, and for all functions which require calculating the value equivalent of an account.

Token Support

The protocol does not support specific tokens by default. Instead, markets must be whitelisted.

Liquid Staking

Staking rewards make up the additional yield to the protocol that implements the classical money market platform with the collateral of liquid staking assets. The auto-compounding of liquid staking assets (eg. stZIL) indirectly incentivises borrowing by growing the value of the lending position over time.

Ionise Token (ION) - coming soon

The Ionise Protocol is governed by the Ionise Token (ION). ION can be earned through providing liquidity and borrowing to the protocol.

Governance

Ionise has been designed to enable community control at its core. The protocol will be controlled by ION token holders creating and voting on proposals.

Governance features include: / Adding new cryptocurrencies or stablecoins to the protocol / Adjusting variable interest rates for all markets / Setting fixed interest rates for synthetic stablecoins / Voting on protocol improvements/proposals / Delegate protocol reserve distribution schedules