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Last updated: Aug 16, 2023
Larix is a metaverse-based finance protocol built on Solana. It is a lending platform that lets users supply and borrow digital assets. It makes use of a dynamic interest rate model and creates more capital-efficient risk management pools ensuring that a broad selection of collateral types can be used in a safe way.
Larix project development has been broken down into three stages. In the first stage of the project, the platform supported only the most popular cross-chain assets with large market caps, in the second stage Larix moved on to accept synthetic assets and in phase three, Larix will accept NFTs as P2P lending.
Currently, Larix is in the second stage of its journey and accepts crypto tokens, stablecoins, interest-bearing assets, and synthetic assets as collateral. According to its roadmap, the protocol plans to extend its collateral base to accept NFT and enable peer-to-peer NFT lending, as well as introduce a series of innovative financial activities such as leasing, mortgaging, and auction of virtual real estate and GameFi components.
The platform breaks down the collaterals in several isolated pools according to the underlying asset risk profiles to control and mitigate platform risks as well as to protect borrowers and lenders from market manipulations.
The platform follows a dynamic interest rate model to manage liquidity. The interest rate alters every 0.4s based on the utilization rate of the liquidity pools available on the platform, meaning that if there are more borrowers, interest rates increase, which helps to attract more lenders to provide liquidity, as well as encourage borrowers to repay. Each asset has its own market of supply and demand with its own APY that evolves with time. The supplied assets can also be used as collateral to borrow again.
Larix users can borrow up to 75% of the collateralized value based on tokens deposited. When the debt value exceeds the collateral value and reaches 100%, the assets are automatically liquidated by bots to repay loans. Every user can also take part in liquidation and get paid 8% of the liquidation amount as reward.
The Larix platform also has mining functionality that distributes the platform’s utility token to users who interact with the protocol.
On the starting page of the Larix app, the dashboard displays information on the user's total supply balance and borrowings, as well as the consolidated ‘Net APR’ percentage based on total lending and borrowing. As a first step, the user has to connect their wallet of choice. So far, the eight types of wallets Larix supports are Phantom, Sollet Extension, Sollet Web, MathWallet, and a few others.
Before borrowing an asset, the user must first supply collateral. After authorizing the transaction, the client will be able to see the amount of value supplied in the dashboard and the yield percentage. This information will vary in real-time as users make more transactions on the platform.
The same applies to borrowing - first, the user has to supply tokens and add them as collateral. Once it is supplied, the client will be able to borrow any asset on the basis of the collateral factor.
Both suppliers and borrowers of the Larix protocol are rewarded with LARIX tokens in addition to the base APY interests.
Larix has a total supply of 10,000,000,000 tokens, which are allocated to mining, treasury, investors, team, and operations. 55% of all tokens are allocated towards the mining and rewards pool, which is split into three portions to cover the three project phases over a five-year horizon.
20% of tokens will be used in Phase 1 for mining to enhance APY of borrowing and lending, followed by 25% and 10% in Phases 2 and 3 accordingly to incentivize the initiatives under these two phases.
The remaining 45% of tokens are allocated as follows: 15% are given to investors, 10% are reserved for the team, 15% - for treasury and ecobuild, and 5% for marketing needs.
In the future, LARIX is planned to be used for economic incentives to encourage users to improve the Larix ecosystem. To promote decentralized community governance, LARIX will allow holders to create and vote on on-chain governance proposals to determine future features and/or parameters of Larix.
To avoid the risk of manipulation and price fluctuations, Larix accepts only assets with a market capitalization of over $10 billion. The platform mitigates the risks of multiple flash-loan attacks and malicious markets through isolated liquidity pools, while the dynamic interest rate model manages liquidity to avoid a “Bank Run”, a term used to describe situations where depositors decide to simultaneously withdraw their assets from the pool due to fears of assets lost.
Larix also runs a Bug Bounty Rewards program. Under it, users are rewarded for auditing the protocol’s contracts and security, finding vulnerabilities, and reporting issues.
In December 2021, a security research company Neodim identified a vulnerability in the Solana program library, which affected several protocols on Solana including Larix. The Larix team promptly eliminated this vulnerability and no funds were lost.
Larix has recently integrated Raydium, which enables Raydium’s LP mortgage lending with auto-compounding. Another strategic partnership is the cooperation with One Ring, which is expected to bring more farming opportunities and integrate NFT lending. The company has also partnered with Marinade enabling depositing and lending of mSOL as well as offering LARIX rewards for those transactions.
On top of that, Larix has developed strategic partnerships with Orca, Soldex, and Tulip Finance. It is backed by companies like Huobi Ventures, Polygon Epsilon, Gate, Solana Capital, Libra, Bitmart, Fenboushi, and many more.
Larix plans to introduce a DAO where the LARIX token holders can contribute to the development of the platform through voting. According to the roadmap, it will soon enable peer-to-peer lending across different assets and support NFT collateralization. Also, the project plans to establish a $20 million Metaverse Support Fund to accelerate the development of the ecosystem.