Ready Player One Loan Agreement

In order to better develop DeFi decentralized finance, Ready Player One will build a decentralized pool-based lending protocol on a multi-chain ecosystem, where different currency markets based on Ethereum assets can be created. A Ready Player One money market is a collection of a specific asset for which an interest rate is algorithmically derived based on the supply and demand for that asset. Borrowers and borrowers of assets will interact directly with the protocol to earn and pay floating rates, respectively, without negotiating anything such as terms, rates, or collateral.

When a lender provides assets to the Ready Player One Lender Protocol, the lender will receive a token called ' sToken '. Based on the demand and supply of a particular asset type in the market, the function Ready Player One will calculate interest on all issued and accrued sTokens . The incentive process is completed by converting the sToken into an increase in the number of underlying assets for its holders. Additionally, sTokens issued to lenders to provide liquidity to one asset pool can be used as collateral for other asset pools.

Every money market will have a collateralization factor (or asset maximum loan value (LTV)), ranging from 0 to 1, representing the fraction of the underlying asset value that can be borrowed. Naturally, illiquid small-cap assets will have a lower collateral factor because they cannot provide good collateral, while liquid high-cap assets will have a higher collateral factor. A user's borrowing ability will be determined by multiplying the value of the user's base token balance by the collateralization factor. Users can borrow up to but not beyond their borrow capacity.

The Ready Player One platform will not take any measures as long as the total value of borrowed assets exceeds the borrowing capacity. However, to protect Ready Player One from the risk of default, a threshold is triggered when the value of outstanding user loans exceeds borrowing capacity (due to price appreciation of the borrowed asset or price depreciation of the underlying collateralized asset). Users can avoid triggering this threshold by adding more underlying assets to their account (i.e., raising the borrowing capacity value above the borrowing asset value). If this is not done, Ready Player One will liquidate the position, which means the borrower will keep the borrowed assets but lose the collateral assets - a process called liquidation.

In the above whole process, the accurate price data of the underlying asset plays a crucial role, which is off-chain information and can be obtained by smart contracts through oracle. Typically, an oracle is a mechanism for fetching/reporting off-chain information to smart contracts . Considering the importance of oracles for the realization and growth of DeFi , there are several projects [Ref13-Ref16] dedicated to solving the oracle problem of DeFi using different methods .

Ready Player One will ensure that its smart contracts capture fast and accurate price data to facilitate instant transactions and eliminate the chance of fraudulent transactions during price fluctuations. To do this, Ready Player One will employ different models depending on the transaction volume - for small transactions, a fast but partially verified (i.e., verified by most but not all agents) oracle model will be followed, while for large transactions, the A well-validated but slow oracle model will be used.