DeFi lending

EBN RWA Asset On-Chain and Securitization Module: An L2 Bridge to Compliant Finance

🏦 EBN DeFi Lending Module: A High-Concurrency Decentralized Credit Protocol Based on L2 Primitives

EBN's DeFi Lending Module (Lending Primitive) is a core financial infrastructure built on a modular Layer 2 framework. Leveraging L2's high throughput and atomic state transitions, the module highly decouples asset custody, algorithmic pricing, and risk liquidation, aiming to provide a capital-efficient and provably secure on-chain credit market for the Bitcoin ecosystem.

1. Collateral Management Contract: Decentralized Asset Custody & State Mapping

Collateral management serves as the cornerstone of the credit market, responsible for trust-minimized custody of assets and tokenization of rights.

• Atomic Asset Locking: Users call the lockCollateral(asset, amount) interface to deposit BTC, EBN native tokens, stablecoins, or RWA assets into L2 smart contracts. Benefiting from the Sequencer's batch packaging mechanism, asset pooling achieves sub-second state confirmation, eliminating the high-latency friction of L1 networks.

• Rights Token Mapping: The contract maintains a real-time User => Asset Matrix mapping and generates ERC-20/721-compliant Collateral Tokens. These tokens are not only the sole proof of entitlement for asset redemption but also composable, serving as the underlying credit assets for users in other EBN ecosystem protocols (e.g., derivative trading).

• Isolated Ledger Mechanism: Adopting an asset isolation pool design, assets of different risk levels (e.g., volatile GameFi assets and stable RWA assets) are logically isolated at the contract level, preventing systemic liquidation caused by the spread of risks from a single asset.

2. Loan Issuance & Dynamic Pricing Engine: Algorithm-Driven Rate Mechanism

The lending module realizes automatic balance of capital supply and demand, and real-time settlement of debt generation through oracle-driven algorithmic models.

• Debt Position Generation: Users call the borrow interface with Collateral Tokens. Based on real-time oracle feeds, the system strictly verifies the account's Health Factor. Smart contracts only mint or transfer lending tokens through the Transaction Execution Engine if the account's Loan-to-Value (LTV) ratio is below the safety threshold.

• Dynamic Interest Rate Model:Interest rate (R) is a function of Utilization Rate (U):$R=f(U)$

  • Non-Linear Adjustment: When the capital pool utilization rate (U) is below the kink point, the interest rate remains low to stimulate lending demand; once U exceeds the kink point, the interest rate curve rises exponentially. This mechanism automatically curbs demand and attracts deposits through high borrowing costs, achieving self-repair of liquidity.

  • Two-Tier Rate Mode: Supports floating rates to meet high-frequency trading needs, while providing fixed-rate options for institutional lending to satisfy long-term capital cost locking requirements.

3. Liquidation Contract & Solvency Protection: Decentralized Insolvency Defense

The liquidation contract acts as the protocol's immune system, responsible for forced liquidation in extreme market conditions to ensure the protocol always maintains an over-collateralization state.

• Real-Time Monitoring by Watcher Nodes: A decentralized network of Watcher nodes continuously monitors on-chain states. Once a user's Collateralization Ratio (CR) falls below the 150% liquidation threshold, the contract immediately marks the debt position as a distressed asset.

• Liquidation Auction Logic:

  • Liquidators call liquidate(user, debtAmount) to trigger execution.

  • Discount Arbitrage Incentive: The system allows liquidators to purchase collateral at a discount (e.g., 5%-10%) below the market price to repay the debt. This provides strong arbitrage motivation for third-party Keepers, ensuring the timeliness and inevitability of liquidation operations.

  • Anti-Insolvency Design: The liquidation logic prioritizes repaying principal and interest, with remaining residual value returned to the user. Before the collateral value plummets to the point of being unable to cover the debt (i.e., CR < 100%), the liquidation mechanism executes in high-frequency, phased batches to minimize bad debt.

4. Risk Control Strategy & Systemic Resilience: Multi-Layered Systemic Risk Defense

EBN has established a three-dimensional risk control system covering parameter layers, execution layers, and capital layers to address systemic risks in the DeFi market.

• Safety Margins:

  • Maximum LTV ratio is set at 60%.

  • Liquidation threshold is set at 150% CR (equivalent to 66.7% LTV).A safety buffer of approximately 6.7% is retained between the two to absorb price slippage during oracle quote delays or on-chain congestion, preventing malicious liquidation of users.

• Ecological Arbitrage & Anomaly Monitoring: Watcher nodes combine off-chain CEX data and on-chain DEX data to monitor price anomalies in real time. If signs of oracle manipulation or flash loan attacks are detected, the system automatically triggers a circuit breaker, suspending lending or liquidation functions to protect asset security.

• Emergency Fund Backstop: As the final line of defense, the EBN protocol reserves 5% of the ecological fund and 3 million USDT in reserves as an insurance fund. In the event of a black swan event leading to failure of the liquidation mechanism or bad debt, the insurance fund will automatically intervene for debt restructuring and user compensation.

Summary: EBN's DeFi Lending Module is more than just a functional component—it is a sophisticated financial engineering system. Supported by L2's high performance and rigorous contract logic, it successfully resolves the impossible trinity of asset liquidity release, risk control, and capital efficiency in the Bitcoin ecosystem, paving the way for the entry of RWA and institutional funds.