FILLIquid

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3 Mar 2024

FILLiquid is a liquidity pool implemented on FVM (Filecoin Virtual Machine) as a fully open-sourced, decentralized, algorithm-based lending platform. Our product facilitates a market that enables FIL token holders to stake their tokens and earn passive income while also allowing Storage Providers (SPs) to borrow FIL tokens for storage provisioning.
SPs sit at the core of the Filecoin network and provide critical roles in data storage and network security. Storage Providers pledge FIL tokens to the protocol to provide storage services on Filecoin's decentralized peer-to-peer storage solution. The Initial Pledge Collateral is an upfront investment mechanism to enhance the network's security. In return, SPs earn transaction fees and block rewards proportional to the amount of storage they contribute to the network.
As SPs are required to hold a certain amount of FIL tokens to participate in the consensus, a strong demand for borrowing FIL tokens is created to increase storage capacity services.
This GitBook serves as a technical overview of FILLiquid's features and functionalities. It covers the background and demand for the FIL lending market, the technical architecture and economic design of the lending protocol, the governance structure, and other administrative aspects as we justify the need for a FIL lending market for storage providers.

FILLiquid is a fully open-sourced, decentralized, algorithm-based liquidity pool and lending platform implemented on the Filecoin Virtual Machine (FVM). It facilitates a market that enables FIL token holders to stake their tokens and earn passive interest income while also providing SPs with the ability to borrow FIL tokens for storage provisioning.

FILLiquid distinguishes itself from other lending markets as it does not require SPs to collateralize fiat currencies or other digital assets to secure a FIL loan. Instead, FILLiquid employs the SPs’ existing account balances and future income as collateral, allowing them to take FIL loans without increasing their financial burdens.
Specifically, the FILLiquid smart contract employs the SPs Beneficiary Address, resulting in the potential income from storage mining being pledged to the protocol while the loan is outstanding. In addition, the Beneficiary Address also contains the previous FIL pledges to the protocol, which can be used for additional collateral.
Taking the protection for lenders one step further, all FIL borrowed on FILLiquid can only be used for the specific purpose of expanding storage capacity. As a result, all FIL borrowed by SPs also enters the Beneficiary Address, meaning lenders are fully protected in the event of a liquidation.

The borrowing interest rate on FILLiquid is dynamically adjusted based on the market conditions relating to the supply and demand of utilization. A higher demand for borrowing FIL increases the utilization rate of the liquidity pool, resulting in higher borrowing interest rates. Conversely, a higher amount of FIL staked reduces the utilization rates, lowering the borrowing interest rate.

Essentially, the FILLiquid liquidity pool lowers the entry barrier for SPs seeking to borrow FIL for power growth and FIL token holders looking to earn a passive income through staking. The protocol acts as a bridge between lenders (FIL token holders) and borrowers (SPs).
FILLiquid will bring unprecedented liquidity to the Filecoin market and help the network achieve its goals in incentivizing a global network of computer operators to provide file sharing and storage services. FILLiquid will increase liquidity and reduce the cost of storage power growth to ensure consistent storage capacity expansion on Filecoin.

https://test.filliquid.io/en/staking
https://fill-liquidity-pool-for-storage.gitbook.io/fill_doc/abstract/abstract