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xToken Lending (Coming Soon)
Lending is a key financial primitive that creates liquidity for the borrower without the need for a sale of assets and provides an opportunity to earn yield for the lender. xToken intends to bring that key functionality to xAsset holders and liquidity providers as soon as possible.
Borrowing against an xAsset effectively frees up a portion of a user's capital while avoiding the sale of that capital. Collateralized borrowing allows xAsset holders to stay long their auto-compounding xAsset(s), while they take advantage of opportunities in the market/pay off debt/make a purchase, and eliminate potential tax liabilities from selling.

Borrowers

In order to borrow from xToken Lending users need to first deposit their xAsset(s) in xToken Lending. The amount a user can borrow is determined by the market valuation of their xAsset(s) and each particular xAsset's health factor.
For example.
All borrowers will receive USDC in exchange for their xToken collateral. Once a borrow has been repaid, the borrower's xAsset collateral can be entirely redeemed or transferred.

Lenders

xToken lending gives users and other protocols another source of USDC yield.

Liquidators

A borrower becomes insolvent when the amount owed exceeds their current borrowing capacity. This asymmetry puts xToken Lending at risk. As a result, xToken Lending incentivize other users, known as liquidators, to repay a portion of the borrowers' outstanding borrow in exchange for a portion of their xAsset collateral.
We are planning a medallion system for liquidators, where medallion owners have exclusive liquidation rights but each owner is only eligible to liquidate a loan on a certain subset of blocks (oversimplified explanation: Medallion #7 can only liquidate loans on blocks divisible by 7).
So how do liquidators buy a medallion? With XTK of course. We’ll be selling (and buying back) medallions on a bonding curve, creating a natural market for liquidation rights.
Last modified 1mo ago