We are thrilled to announce a significant milestone in the journey of The CREDIT Protocol – the introduction of our first cohort of testers onto the platform. This marks the commencement of an exciting phase where our first community members will interact with our protocol, providing invaluable insights that will shape the evolution of CREDIT.

Embarking on a New Chapter

The inception of this testing phase signifies a collaborative effort to refine and optimize The CREDIT Protocol. The diverse group of testers was hand selected from the sign up form, comprising DeFi power users, DeFi enthusiasts, developers, and financial experts. Together we will work with them to optimize and refine the features and fixed-income functionalities our platform offers prior to the full launch.

We believe in the power of community and collaborative effort. The feedback and experiences shared by our testers will be instrumental in identifying areas of improvement, ensuring that CREDIT evolves into a robust and user-centric DeFi platform.

The Testnet: A Playground

Our incentivized testnet “Seasons”, will serve as the playground where our testers will engage with various lending, borrowing, and liquidity provision protocols. Your interactions will provide a realistic portrayal of the platform’s performance and potential, paving the way for refinements.

We are primarily looking for feedback on:

• User flow / Experience

• Bugs

• Any additional product feedback (new features)

Rewarding Participation and Feedback

Engagement in the testnet will be rewarded through a structured points system, recognizing the contributions of each tester towards enhancing the platform. We are committed to fostering a rewarding and enriching experience for our testers, valuing every feedback that propels us closer to our vision.

The insights gleaned from this testing phase will be crucial in fine-tuning the user interface, smart contract interactions, and overall user experience. We aim to make CREDIT an intuitive and seamless platform for all users, irrespective of their DeFi experience.

Cohort ONE participants have been invited into a private TG group.

Looking Ahead

As we take this significant step closer to our mainnet, we look forward to the discoveries, improvements, and advancements that will ensue during this pivotal phase. We are grateful to our first cohort of testers for embarking on this journey with us, and we are very excited to share theshard work that has been going on behind the scenes the bring the CREDIT protocol closer to launch.

PLEASE NOTE: If you have not been selected for Cohort ONE do not worry, we will be launching a new cohort very soon.

Stay tuned for updates, share in the excitement, and join us in the forthcoming phases of testing as we continue to shape The CREDIT Protocol into a cornerstone of fixed-income DeFi.

Cohort ONE:

Congratulations to the community members who are in Cohort ONE.

To earn points, below a list of potential user behaviors to think about when interacting with The CREDIT Protocol.

• Taking out a loan

• Repaying a loan

• Partially repaying a loan

• Providing liquidity

• Withdrawing liquidity

• Lend to multiple pools

• LPing in multiple pools

You should also beware of leaving the pool with debt (not repaying your loan), or imbalancing the pool. We intend to analyze such user actions and the effects of it.

Check out our previous article for a guide on how to use the basic features:

https://mirror.xyz/0x10AC1635bbC81cF86ca0F5dC29Ca652D777BDa0A/BSrL8KQS9dIAklGKArRpO6niUbrlNPKwFZVyMm1f6vA

You may check if you are whitelisted by navigating to https://testnet.creditprotocol.io/credit and connecting your wallet. If you are able to access the platform the all is set.

See you in Telegram!

In traditional finance (TradFi), fixed-income plays a crucial role as a stable and predictable market. It encompasses government and corporate bonds, municipal securities, and other debt instruments. This sector offers investors a steady income stream over time and is foundational to the global financial system due to its massive size, with trillions of dollars in bonds alone.

Paving the Way in DeFi: Learning from TradFi

The enormity and stability of the traditional fixed-income market present a promising opportunity for DeFi. By integrating fixed-income mechanics, DeFi can attract a broader spectrum of investors, and users; especially those who value the predictability and reliability found in traditional fixed-income products.

Leading the way, will be platforms like The CREDIT Protocol, which mirror the stability of fixed-income in TradFi but onchain. The DeFi ecosystem is volatile, fixed rates allow you to transition from something variable to stable, bringing stability as well as diversity.

This not only provides a safer haven for more risk-averse participants in the crypto space, but also invites traditional investors, potentially ushering in a new era of growth and stability in DeFi. By fostering a more predictable and secure environment, the incorporation of fixed-income in DeFi, is a significant step towards scaling and harmonizing DeFi with the steadiness of traditional fixed-income markets.

Currently, users often do not have the option to enter a position in a money market tailored to their own risk appetite or strategy. Similarly, the market in the last year has somewhat devolved into not serving the actual needs and wants of users, it has resulted in a fun casino but, too many PvP/PvE and zero-sum liquidity games are not ideal for scaling the industry, and pushing it forward.

CREDIT: A Forerunner of Fixed Income in DeFi

As previously discussed, The CREDIT Protocol offers a new financial primitive and credit baseplate. The powerful credit engine offers dynamic determination of interest rates and collateral factors based on market activity, as well as customizable risk parameters, support for illiquid, volatile, and long-tail assets, and more - CREDIT provides robust infrastructure for secure and efficient lending activities. Its fixed-rate structure ensures a consistent interest rate throughout the loan term, providing clarity and predictability for both borrowers, lenders and liquidity providers.

Moreover, by eliminating the reliance on oracles and collateral liquidations, The CREDIT Protocol significantly reduces the associated risks, enhancing the security and user-friendliness of the DeFi space. These features not only foster trust but also encourage participation, driving the maturity and growth of the DeFi ecosystem.

The CREDIT Protocol's support for a wide range of assets, including long tail assets and offering permissionless listing of new tokens, promotes financial diversity. This expanded asset support, combined with a fixed interest rate model, makes The CREDIT Protocol a robust platform that enhances market efficiency and financial stability in the DeFi sector. For the majority of DeFi money markets it is down to ‘governance’ to adjust the various market parameters. They do not offer truly decentralized and market driven borrowing and lending opportunities for all.

The CREDIT Protocol addresses the issue of fluctuating interest rates in DeFi, thereby promoting a more reliable and transparent lending experience. This innovation represents not only progress in DeFi lending but also a significant step towards a more stable and predictable DeFi ecosystem. It also means that we are able to build more sophisticated financial instruments on top of the base layer, and also deploy vaults where users can park their capital for extra yield.

In conclusion, The CREDIT Protocol demonstrates how fixed-income can be seamlessly integrated into DeFi, setting an example for other platforms to foster financial stability in a decentralized setting. Through its innovative features, The CREDIT Protocol is not just a participant in the DeFi space but also a harbinger of stability and inclusivity in decentralized financial systems.

See it in Action

Core Features: Lending

Selecting a lending pair, choosing pool and loan term (expiry date), amount and take a lending position.

https://x.com/creditprotocol/status/1714988214492987859?s=20

Core Features: Borrowing

Selecting a lending pair, choosing pool and loan term (expiry date), amount and take a borrow position.

https://x.com/creditprotocol/status/1714989696424542393?s=20

Core Features: Liquidity Provision

Selecting a lending pair, choosing pool and loan term (expiry date), amount and deposit both assets and collateral.

https://x.com/creditprotocol/status/1714991410229706842?s=20

Core Features: Loan Repayment

Repay a loan before expiry of pool. You will forfeit your collateral used to take out the loan if it is not repaid.

https://x.com/creditprotocol/status/1714993017864483293?s=20

Core Features: Settlement

Settle your positions at pool expiry. Claim, or withdraw.

https://x.com/creditprotocol/status/1714994492246298770?s=20

Join the Beta!

Your engagement and involvement are vital in our ongoing efforts to enhance and optimize the protocol's features and functionalities. We wholeheartedly encourage you to sign up for the beta launch. Dive into its immersive features, and provide us with your valuable feedback for continuous improvement. Together, we can shape the future of decentralized finance and unlock a world of possibilities with The CREDIT Protocol.

You need to fill out the form below in order to be eligible for the beta.

https://forms.clickup.com/14283197/f/dkwdx-573/031SHZFLY0UVZJ5UZT

Let’s get it!

Join the Beta!

Thank you for signing up and showing interest in The CREDIT Protocol Beta Testnet. We appreciate your enthusiasm and support.

If you have not signed up for the beta, you can sign up here!

The beta testnet will be gated, by whitelist invites for users to test the platform.

https://forms.clickup.com/14283197/f/dkwdx-573/031SHZFLY0UVZJ5UZT

What are Seasons?

Seasons are structured phases that will guide your participation. Each season will onboard a new cohort of users. The aim is to make your interaction with The CREDIT Protocol as informative and rewarding as possible. So you might want to try and get as many points possible…

In each Season, you will have the opportunity to explore different features of the protocol. This structured approach helps organize the testing process, allowing us to gather focused feedback on various aspects of the system.

What are Points?

The points you earn through participation will be instrumental for various purposes, which will be detailed further in upcoming communications. Simply put, earning more points will mean more opportunities and rewards in The CREDIT Protocol & Meliora ecosystem.

User Feedback

We want to emphasize that your feedback and participation are crucial for the improvement and optimization of the CREDIT Protocol. Through the 'Seasons' and points system, we hope to encourage active participation and make the beta testing process more engaging and productive.

Thank you for being part of this important phase of the CREDIT Protocol. We look forward to your valuable contributions and feedback.

Using the Protocol

Core Features

Lending: Selecting a lending pair, choosing pool and loan term (expiry date), amount and take a lending position.

Tutorial Video Here:

https://www.loom.com/share/35ed2f9cf70b4c7bb6672799a6f9d4fc

Borrowing: Selecting a lending pair, choosing pool and loan term (expiry date), amount and take a borrow position.

Tutorial Video Here:

https://www.loom.com/share/d0c8a7234ad5432eb84ee626c05a251c

Liquidity Provision: Selecting a lending pair, choosing pool and loan term (expiry date), amount and deposit both assets and collateral.

Tutorial Video Here:

https://www.loom.com/share/5c9df0e96e1949349b288671fcbcaaef

Loan Repayment: Repay a loan before expiry of pool. You will forfeit your collateral used to take out the loan if it is not repaid.

Tutorial Video Here:

https://www.loom.com/share/4e8f0e7a9bd948d1a3aac0086f771893

Settlement: Settle your positions at pool expiry. Claim, or withdraw.

Tutorial Video Here:

https://www.loom.com/share/1a7041f4947f4eeb930dadf577e52847

User behavior

Below is a list of potential user behaviors to think about when interacting with The CREDIT Protocol.

• Taking out a loan

• Repaying a loan

• Partially repaying a loan

• Providing liquidity

• Withdrawing liquidity

• Lend to multiple pools

• LPing in multiple pools

You should also beware of leaving the pool with debt (not repaying your loan), or imbalancing the pool. We intend to analyze such user actions and the effects of it.

Bugs and Feedback

Bug testing will be a crucial component. Participants are encouraged to actively engage with the platform, identifying any irregularities or issues that might hinder functionality or user experience.

Your role in identifying and reporting bugs is invaluable, as it will aid in the refinement and optimization of the protocol, ensuring that it operates seamlessly upon full launch. We seek detailed feedback, which can be instrumental in diagnosing and rectifying problems efficiently.

More details on bugs will be released in future communications.

Telegram Group

Each seasonal cohort will have it’s own deciated telegram group chat with the Volatilis team. We will invite people to the testnet beta TG group after communicating details of the seasonal cohorts.

Key Definitions:

Asset - Asset available for borrowing

Collateral - Collateral locked to borrow an asset

APR - Annual Percentage Rate

Interest Rate - Interest rate for borrowers relative to the position term

CDP - Collateralized Debt Position

Borrow Limit - Limit on borrow position

Loan Term - Length of the fixed-term borrowing/lending pool

Utilization Rate - % of supplied assets borrowed

Pool Reserves - Value of Asset and Collateral in the pool

Redeemable Amount - Projected amount of assets expected at pool expiry for your position

Insurance Coverage - When lending, the amount of coverage you are receiving for your loan (as a lender). Should defaults occur the collateral in the pool will be used as coverage

Debt Ratio - The ratio of total debt to total assets

Borrowed Amount - Total assets borrowed

Collateral Balance - Available Collateral for Lenders

Borrower Debt - Debt accumulated by borrowers

Pool Pair - A pool pair contains both assets (to be borrowed), and collateral. There can be multiple pools with differing expiries for the same pool pair.

The CREDIT Protocol introduces a multitude of advanced features meticulously designed to transform the lending, borrowing, and liquidity provision experiences for users.

Allow us to provide you with a comprehensive overview of what you can expect next.

CREDIT Beta Testnet Details

The key details you should know about the beta.

• We are going to initially launch the beta testnet on Arbitrum Goerli before moving to Meliora and Arbitrum Mainnet

• The protocol will be gated and available for whitelisted addresses only.

• Only the core features will be available for the beta.

• We will do seasons, for beta users.

• You will be able to earn points from the beta.

• There will be a feedback system.

Details on incentives (points and seasons) will follow in the coming days!

The CREDIT Protocol

Credit Position System: LP, Borrow or Lend.

At the heart of the CREDIT Protocol lies the ingenious CreditPosition system, which empowers users with unparalleled flexibility in managing their loans. With this innovative feature, users have the freedom to make partial or multiple repayments on their loans, offering them complete control and customization in loan management. This level of autonomy ensures a seamless and personalized borrowing experience like never before.

Beta launch Participation and Points System

We invite you to the beta launch.

The exclusive opportunity allows you to not only explore the cutting-edge features of the CREDIT Protocol but also contribute your valuable feedback to shape its future. We have implemented a points system to reward active participation and feedback during this beta phase. More details on this points system will be unveiled in a forthcoming article, so stay tuned!

Join the Beta

Your engagement and involvement are vital in our ongoing efforts to enhance and optimize the protocol's features and functionalities. We wholeheartedly encourage you to sign up for the beta launch. Dive into its immersive features, and provide us with your valuable feedback for continuous improvement. Together, we can shape the future of decentralized finance and unlock a world of possibilities with The CREDIT Protocol.

You need to fill out a form in order to be eligible for the beta.

https://forms.clickup.com/14283197/f/dkwdx-573/031SHZFLY0UVZJ5UZT

Features that will be available later during the full launch:

Staking

To further enhance the ecosystem, The CREDIT Protocol incorporates a robust staking infrastructure that allows users to stake their CREDIT tokens. This epoch-based mechanism ensures efficient management and incentivizes longer-term staking by imposing penalties for early withdrawal. By participating in staking, users can not only contribute to the protocol's stability but also unlock exciting rewards and opportunities.

Strategy Vaults

Recognizing the diverse needs of both retail and larger investors, The CREDIT Protocol introduces Strategy Vaults. Our vaults simplify the liquidity provision process and expand the horizon of possibilities for users to capture value from the protocol.

Vaults offer a range of accessible options to diversify investment strategies based on individual investor preferences and expertise. Whether you are a seasoned investor or just starting, the Strategy Vaults provide a user-friendly platform to maximize your potential yield.

Our first vault will be an LP hedging vault.

CREDIT Token

At the core of the CREDIT Protocol is the CREDIT token, a powerful utility token that unlocks a world of benefits for its holders. By owning CREDIT tokens, users can capture platform fees, earn lucrative rewards through staking, actively participate in platform governance, and enjoy countless other advantages within the ecosystem. The CREDIT token truly empowers users to make the most of their involvement in the protocol.

Resources

Volatilis Website

Volatilis Twitter

CREDIT Twitter

Meliora Website

Meliora Twitter

The name Meliora, comes from the latin phrase “Semper ad Meliora” - meaning ‘always to better things’ which at its very core is the ethos of crypto and why we are all here.

In the ever-evolving blockchain sphere, the appchain thesis follows that dedicated, application-specific blockchains (appchains) can provide enhanced scalability, customization, and performance, tailored to the unique requirements of individual applications, rather than adopting a one-size-fits-all approach.

Let’s delve into the intricacies of Meliora.

What is Meliora?

Meliora is a user-centric appchain focused on building a robust ecosystem of tailored applications enabling seamless and complexity-abstracted interaction with open money markets.

Meliora aims to create a robust and secure infrastructure that provides a high-performance environment for the creation of an ecosystem of fixed-income/credit-based applications.

Arbitrum Orbit

By using the Arbitrum Orbit rollup stack, we can achieve greater customization and better performance. The CREDIT protocol acts as a foundational layer, which paves the way for us to develop a variety of DApps and create a more comprehensive ecosystem.

High throughput and lower transaction fees are key attributes of Meliora, aligning with Volatilis' vision to reshape finance. As the primary platform for The CREDIT Protocol, Meliora fosters seamless operations across our DApp ecosystem.

Utilizing the rollup chain's benefits, Meliora ensures fast, cost-effective transaction processing. This not only improves user experience but also opens up new revenue opportunities.

Harnessing the power of the Arbitrum Orbit rollup stack, Meliora promises enhanced customization and a highly performant environment, and developer tooling. The integration of the CREDIT protocol at base level further reinforces the appchain's capability, paving the way for the inception of diverse DApps and fostering an all-encompassing, composable ecosystem.

The Origin: From CREDIT to Meliora

The genesis of Meliora stems from The CREDIT Protocol, initially conceptualized for deployment on the Arbitrum Layer 2.

The CREDIT Protocol was initially designed to be deployed on the Arbitrum Layer 2 platform. Despite careful planning and execution, we faced limitations that prompted us to reassess and restructure our approach, leading to the development of Meliora.

Caldera Collaboration

We have strategically partnered with Caldera, a company specialized in providing rollup-as-a-service solutions. Caldera will assist us in deploying all the crucial components of the Meliora chain. Their expertise and experience in this field are instrumental in delivering a robust, efficient, and secure Layer 3 solution.

This partnership with Caldera allows us to focus on our core competency: building and deploying high-quality, innovative decentralized applications (DApps) on the Meliora chain. Meanwhile, Caldera handles the technical complexities involved in setting up and maintaining the chain infrastructure, thereby accelerating our go-to-market strategy.

Customization

Here are the critical technical specifications and design decisions that will shape the Meliora chain:

1. Block Time: This refers to the average time it takes to create a new block in the blockchain. We aim for a relatively low block time, consistent with Caldera chain's performance level.

2. Finality Period: This is the timeframe during which a transaction can be challenged. Once this period elapses, the transaction is considered final. We have opted for a 24-hour finality period. This period represents a balanced trade-off between security and efficiency, which is suitable for our Meliora application.

3. Gas Abstraction: The primary gas token will be $MELIORA. However, it will also be possible for users to pay gas fees using $CREDIT. This flexibility enhances user experience and promotes the use of our native tokens.

4. Ethereum Improvement Proposal (EIP) Compatibility: Our system will support EIP 4337 (Account Abstraction), ensuring compatibility with widely used wallets like MetaMask.

Meliora Token

The Meliora chain will introduce its native token, $MELIORA. While the exact use cases and scope of this token are yet to be finalized, several potential applications are being considered:

1. Validator Staking: $MELIORA may be used for staking purposes.Validators, who play a crucial role in ensuring the security and integrity of our blockchain, may need to stake $MELIORA tokens as a part of their role.

2. Gas Token: $MELIORA could serve as the primary token for paying gas fees on the Meliora chain. This use case aligns with the common practice in many other blockchain networks, where the native token is used to pay for transaction and computational costs.

3. Grants to Teams: We may allocate a portion of $MELIORA tokens for grants to incentivize teams contributing to our ecosystem. This could foster growth, innovation, and collaboration within our community.

4. Potential Sequencer/Gas/MEV Fee Sharing: We are also considering sharing sequencer fees, gas fees,and Miner Extractable Value (MEV) revenue with $MELIORA holders. This could incentivize token holding and usage, and potentially distribute wealth back into our community.

5. Governance

These proposed uses of $MELIORA aim to establish a vibrant, collaborative, and economically incentivized ecosystem around our Meliora chain.

Please note that these are just potential use cases, and final decisions will be made after further discussions and considerations.

Deployment Strategy

A Phased and Pragmatic Approach

Meliora's unveiling will be phased in multiple stages - with the aim of launching near the start of 2024. From an initial testnet launch to the ultimate official launch, every phase is designed for rigorous validation, ensuring users and developers experience unparalleled reliability and performance and with security being our primary focus.

1. Testnet Launch: The first phase is the launch of a testnet, during which we will deploy the full protocol. This stage will serve as our playground for discovery and understanding of the technology stack. It will also enable us to test predefined use cases.

2. Alpha Mainnet Launch: Upon successful testnet trials, we plan to launch an alpha version of the mainnet. This version will continue the testing of both the protocol and the chain. We will initiate a reduced or "nerfed" version of the protocol for this phase, to safely test functionalities in a real-world context.

3. Beta Mainnet Launch: Within sights gained from the alpha stage, we'll implement necessary improvements and corrections before transitioning to a beta version of the mainnet. This version will provide a more robust testing environment, accommodating a larger user base and allowing for more thorough stress-testing and error-detection.

4. Official Launch: After successfully navigating the beta testing phase and implementing any further necessary modifications, we will move towards the official launch of the Meliora mainnet. This phase represents the culmination of our extensive testing and refinement processes. Here, we will fully roll out the protocol and chain in their final forms, ready to be utilized by our user base. The official launch represents the final and most comprehensive testing stage, where we aim to confirm the scalability, security, and efficiency of our system in a live, fully-functional state.

Onwards

Meliora, offers a potent blend of user-centricity and technological innovation, it is poised to become a hub for a new wave of financial instruments that DeFi needs in order to mature into its next phase. Meliora will be a testament to the boundless potential of decentralized finance.

Volatilis' vision echoes throughout Meliora's architecture, promising an alignment with high throughput capabilities, minimal transaction fees, and a vision to become a liquidity hub for fixed income financial products. Money markets are just the start but we will be able to build an entire market for more sophisticated financial instruments like credit default swaps, interest rate swaps and debt financing.

For every enthusiast and crypto participant, Meliora offers a glimpse into the future – one where complexity is abstracted, and user experience reigns supreme.

Come join us!

What’s Next?

In the coming days we will be onboarding the first cohort of beta testers for The CREDIT Protocol and the Meliora Appchain. Stay tuned by following our socials!

Resources

Volatilis Website

Volatilis Twitter

CREDIT Twitter

Meliora Website

Meliora Twitter

Native to its own dedicated Arbitrum Orbit Appchain “Meliora”; CREDIT eliminates reliance on oracles and liquidations, enhancing stability and transparency, which are often lacking in the DeFi ecosystem.

By offering dynamic determination of interest rates and collateral factors based on market reactions, as well as customizable risk parameters, support for illiquid, volatile, and long-tail assets, and more - CREDIT provides robust infrastructure for secure and efficient lending activities.

With its versatile design, The CREDIT Protocol empowers users to optimize capital utilization, manage risk effectively, and benefit from market diversity. Additionally, it enables developers to experiment with yield curves and expand the DeFi fixed-income/credit market with ease.

Value Propositions

Borrowing and Lending AMM

The CREDIT Protocol provides an Automated Market Maker (AMM) platform specifically designed for borrowing and lending purposes.

Oracleless Architecture

By eliminating the reliance on pricing oracles, The CREDIT Protocol significantly reduces risks and potential attack vectors, ensuring a more secure ecosystem.

No Liquidations

Users are not subjected to volatility-induced collateral liquidations. They only need to repay their outstanding debt before the agreed term ends for the lending pool.

Fixed-term Borrowing and Lending

Borrowers can select a specific pool and agree upon the duration of the loan term, providing clarity and predictability to both borrowers and lenders.

Fixed-Rate Structure

Borrowers and lenders can establish a fixed interest rate at the initiation of the loan, which remains constant throughout the loan term, ensuring stability and transparency.

Ecosystem and Partners

The CREDIT Protocol offers treasury management solutions through borrowing and lending and custom pools or vaults - enabling seamless integration with partner platforms.

$CREDIT Token Rebates

In the event of debt defaults, LPs can receive rebates in the form of $CREDIT tokens, fostering a fair and incentivized lending environment.

Liquidity Incentives for LPs

Liquidity Providers (LPs) can earn yield through the CREDIT Protocol by participating in liquidity pools and benefitting from attractive incentives.

Composable Credit Base Layer

The CREDIT Protocol serves as a foundation for more advanced financial products, allowing the development of sophisticated offerings such as our own Automated Strategy Vaults.

Sophisticated Liquidity Provisioning

Liquidity providers can access more advanced options for offering liquidity, enhancing their ability to participate in the ecosystem.

Arbitrage Opportunities

Credit pools within The CREDIT Protocol offer opportunities for arbitrage by capitalizing on interest and collateral imbalances, creating favorable trading conditions.

Introduction

Maker, Aave, and Compound have paved the way for collateralized money markets, accumulating over $40 billion in locked value within these protocols. While these platforms have successfully established robust financial markets, there is always room for improvement, diversity, and enhancement.

Oracles

Oracles play a pivotal role in the functioning of lending protocols by acting as intermediaries that provide off-chain data to the blockchain or supply on-chain data to other participants. This data can include token prices, interest rates, or various other market metrics. As DeFi projects heavily rely on oracles to execute logic within their smart contracts, it is crucial to choose oracles that are resistant to manipulation by potential bad actors.

However, despite their critical role, oracles have often been the weak link in the security of DeFi protocols, leading to significant financial losses.

The recurring nature of these incidents highlights the current limitations of price oracles. Although various oracle solutions are currently available, they are either not fully decentralized or, if they are, they remain susceptible to manipulation. Consequently, despite ongoing efforts to develop more robust oracle solutions, the existing offerings continue to pose potential risks for DeFi projects. The issues surrounding oracle security underscore the need for more reliable, manipulation-resistant oracle solutions in the DeFi ecosystem.

Liquidations

Traditional DeFi lending platforms put borrowers at risk by liquidating collateral if its value falls below a specific threshold. This practice creates fear and instability, potentially leading to unfair asset seizures and hindering the growth of the DeFi ecosystem.

The CREDIT Protocol addresses this issue by eliminating collateral liquidations entirely. Borrowers using The CREDIT Protocol are not subjected to the seizure of their collateral if its value decreases. Instead, they only need to repay their outstanding debt before the agreed term ends for the lending pool. By removing the risk of collateral liquidations, The CREDIT Protocol empowers borrowers to leverage their assets effectively and participate more actively in DeFi lending.

This approach fosters a forgiving and user-friendly borrowing experience, instilling trust, stability, and fairness in the lending ecosystem.

Fixed Rates and Fixed Terms

In most existing DeFi lending platforms, the fluctuation of interest rates poses a significant challenge for lenders. Calculating returns over time becomes complex due to the volatility, creating uncertainty and hindering the ability to achieve stability and predictability in investments. The absence of fixed interest rates introduces ambiguity, making it difficult for lenders to make well-informed investment decisions.

The CREDIT Protocol revolutionizes this aspect by introducing fixed rates and fixed terms, offering a unique solution to address the challenges faced by lenders. With The CREDIT Protocol, users can enjoy the benefits of a fixed interest rate that remains unchanged throughout the duration of the loan. This stability and predictability provide users with a clear understanding of the interest they will earn from their investments, ensuring a transparent and consistent lending experience.

The CREDIT Protocol is driven purely by market forces. Yes, we have fixed rates that are ‘locked in’ i.e. taken by every individual position, but are not universal, they represent the current market demand when the position is taken- they are unique positions and function as a price/rate discovery mechanism. All variables in the algorithm, such as Interest Rate, collateral factor and borrow limit dynamically change based on activity in the accompanying pool. Every interaction will make the needles move allowing for market exploration. A “hybrid” model this way, the best of both worlds.

By eliminating the uncertainty associated with fluctuating interest rates, the CREDIT Protocol empowers users to calculate their returns accurately and make more informed investment decisions. Lenders can have confidence in their investment strategy, knowing that their expected returns will remain steady throughout the loan period. This feature not only enhances user trust and satisfaction but also encourages greater participation and engagement within the lending ecosystem.

The introduction of dynamic fixed rates and fixed terms through the CREDIT Protocol marks a significant advancement in DeFi lending, as it provides users with a reliable and predictable framework for their investments. By promoting stability and transparency, The CREDIT Protocol sets a new standard for lending platforms and contributes to the overall growth and maturation of the DeFi ecosystem.

Unlimited Asset Options

Existing DeFi lending platforms primarily focus on supporting highly liquid assets, which excludes a significant portion of the market consisting of volatile, long-tail, and illiquid assets. This limited asset selection restricts investment opportunities and narrows the scope of the DeFi ecosystem, preventing users from fully utilizing their holdings.

The limited availability of asset options in traditional lending platforms has several implications. Firstly, it hampers the growth and adoption of these assets by restricting the liquidity options available to asset holders. Secondly, it reduces investment opportunities for users who hold such assets, limiting their ability to maximize returns and diversify their portfolios. Lastly, it creates a barrier to entry for innovative projects and tokens that do not fit within the framework of highly liquid assets.

The CREDIT Protocol addresses this issue by providing a solution that allows for the creation of new pools for any ERC20 token, including volatile, long-tail, illiquid assets, LP tokens, wrapped NFTs and Social Tokens. By facilitating borrowing and lending activities involving these assets, The CREDIT Protocol unlocks opportunities for users to leverage their holdings, access liquidity, and earn yield on a more diverse range of tokens.

This expanded asset selection opens up new possibilities for users, enabling them to tap into the potential of previously underserved assets. It promotes a more inclusive and vibrant DeFi ecosystem by accommodating a wider range of tokens, fostering innovation, and providing users with greater flexibility in managing their investments. With The CREDIT Protocol, users can explore investment opportunities beyond the highly liquid assets, diversify their portfolios, and participate more actively in the evolving landscape of decentralized finance.

Risk Customization

Existing DeFi lending platforms often lack options for borrowers and lenders to customize their risk profiles according to their specific needs. This lack of customization restricts users from aligning their borrowing and lending activities with their risk tolerance and investment strategies. Consequently, users may have to compromise on their preferred risk-return tradeoff, leading to suboptimal decision-making.

Tailored risk profiles are essential for users as they enable them to align their borrowing and lending activities with their risk tolerance and investment strategies. By offering the ability to customize risk exposure, users can optimize their portfolio management, diversify their investments, and mitigate potential losses. Moreover, tailored risk profiles enhance user confidence and satisfaction by providing a more personalized and flexible lending experience.

The CREDIT Protocol effectively addresses this issue by offering increased control and versatility in tailoring risk profiles. Users can select specific pools with time parameters that match their risk appetite, and they can adjust their interest and collateral parameters to an unparalleled degree. Additionally, users have the flexibility to establish a fixed interest rate at the initiation of the loan, which remains constant throughout the loan term. This feature empowers users to manage their expectations and plan their finances with greater certainty.

With the ability to customize risk profiles, users can fine-tune their borrowing and lending activities to align with their specific goals and risk tolerance. This level of customization opens up opportunities for users to optimize their returns while effectively managing and mitigating risks. The CREDIT Protocol sets a new standard in risk customization within the DeFi lending space, empowering users to make informed decisions and tailor their lending activities according to their individual preferences.

Meliora Appchain

Meliora is a user-centric appchain focused on building a robust ecosystem of tailored applications enabling seamless and complexity-abstracted interaction with open money markets.

By leveraging the Arbitrum Orbit rollup stack, we can achieve greater customization and better performance. The CREDIT protocol acts as a foundational layer, which paves the way for us to develop a variety of DApps and create a more comprehensive ecosystem.

High throughput and lower transaction fees are key attributes of Meliora, aligning with Volatilis' vision to reshape finance. As the primary platform for The CREDIT Protocol, Meliora fosters seamless operations across our DApp ecosystem.

Utilizing the rollup chain's benefits, Meliora ensures fast, cost-effective transaction processing. This not only improves user experience but also opens up new revenue opportunities.

The Protocol

The CREDIT protocol functions as a factory contract that generates pair contracts for any combination of ERC20 tokens. These pairs consist of an asset and its corresponding collateral. The factory contract operates in a permissionless manner, allowing any user to create a pair using their selected assets.

Interactions with the CREDIT protocol are facilitated through a dedicated router contract. This router contract simplifies the process by abstracting the underlying complexities associated with direct interaction with the pair contract. It incorporates various protective mechanisms known as "guardrails" that mitigate the risk of errors and safeguard users from potential threats.

The CREDIT protocol caters to three distinct types of users:

1. Lenders: Lenders, who generally have a lower time preference for their tokens and seek minimal risk, utilize the protocol to earn yield by lending their tokens in a fixed-income environment. They also acquire coverage, which provides claims to the collateral of defaulting borrowers. This feature enables each lender to manage the balance between default risk and potential yield.

2. Borrowers: Borrowers, on the other hand, typically have a higher time preference for tokens. They may require tokens for immediate use, futures trading, leveraging their collateral, or shorting. Borrowers utilize the protocol to obtain loans with a fixed yield, backed by their collateral. The collateral will only be liquidated and allocated to lenders if the borrower chooses not to repay their debt before expiry.

3. Liquidity Providers: Liquidity providers play a vital role in the protocol as they provide tokens to the pool, creating markets for both lending and borrowing transactions. They profit from the spread between lenders and borrowers, which is determined by the volume and size of transactions within the pools.

Positions within a pool are represented by an ERC721 token called the CREDIT Position. This token serves as a digital marker, encapsulating and tracking individual user positions. There are three distinct types of CREDIT Positions: Debt, Credit, and Liquidity, each corresponding to different user roles within the ecosystem.

These CREDIT Positions allow associated users to monitor, manage, and retrieve information specific to their positions within the protocol. By categorizing positions into these types, The CREDIT protocol delivers a personalized, transparent, and efficient user experience.

Notably, the protocol does not rely on price feeds or oracles because liquidation is based on the borrower's decisions, assuming rational behavior. As the pool's expiry approaches, borrowers are more likely to repay their debt if the value of their locked collateral exceeds the debt value. Conversely, if the collateral value is lower than the debt value, borrowers are more likely to default.

Trivariate Automated Market Maker

The CREDIT AMM relies on three variables. The interaction among these variables directly influences the interest rate and the necessary collateral factor for participation in the liquidity pools. This approach allows the protocol to function independently of oracles and liquidations, providing a robust and secure environment.

For instance, an increase in asset lending into the pool results in a decrease in both the interest rate and the collateral factor. However, the borrowing of more assets from the pool leads to an increase in the interest rate and collateral obligations.

CREDIT operates within a market-oriented framework, where the smart contract dynamically sets the interest rate for fixed term deposits and loans, as well as the minimum collateral required for borrowers. The algorithm is sensitive to the prevailing market conditions and adjusts these vital parameters accordingly.

When the average pool interest rate deviates above the market interest rate or when the required minimum locked collateral exceeds the market collateral requirement, pools become more appealing for lenders. In response, arbitrage-oriented lenders actively engage in the pool, initiating transactions that adjust the asset pool, the collateral factor, and the interest rate. This process reduces the average interest rate and minimum collateral required by borrowers, aligning these figures with the current market rates.

On the other end, when the average interest rate in the pool falls below the market interest rate, pools become attractive for borrowers. Arbitrage-seeking borrowers respond by borrowing from the pool, triggering transactions that adjust the principal, collateral factor, and interest rate. This action increases the average interest rate and the minimum collateral required, aligning them effectively with market expectations.

Through this dynamic transactional interaction, the protocol seeks to align the average interest rate more closely with the prevailing market rate and adjusts the required minimum collateral to match the market standards. This market-responsive mechanism guarantees a flexible environment for the adjustment of interest rates and collateral requirements within the protocol. Provided enough volume it also provides the broader DeFi ecosystem with a purely unbiased rate oracle, similar to Uniswap TWAP.

Credit Position

To maintain accurate records of users' positions, balances are tracked per NFT ID. This allows the system to accurately reflect the position associated with each NFT. In light of this, we have named this mechanism the CreditPosition.

The Credit Position NFT, integral to the CREDIT protocol, signifies a user's position within the lending pool. It has three specific types, each correlating with a different role - liquidity providers, borrowers (debt), and lenders (credit).

The Credit Position NFT natively represents users’ positions. This flexibility adds another layer of versatility to user positions within the protocol and by interacting with the protocol using their NFT, users benefit from a simplified experience while engaging with the protocol.

Debt

In the context of the CREDIT protocol, the Debt Credit Position NFT represents the position of a borrower in the lending pool. It encapsulates two critical components:

1. The Debt: This represents the borrowed amount that the borrower needs to repay. It also includes the interest that accrues over time until repayment or expiry.

2. The Collateral: This is the asset provided by the borrower as security against the loan. The collateral serves to mitigate the risk to the lender, and it may be liquidated in the event of a default by the borrower.

Liquidity

Lenders in the Credit protocol receive a loan corresponding to the lent amount, along with the interest accrued over the loan period. This is encapsulated within the CREDIT Credit Position NFT. Furthermore, in a scenario where the borrower defaults, the lenders also receive coverage to mitigate their risk. This coverage claim, along with the loan and interest, are all represented within the same Credit Position NFT.

Credit

The Credit Position NFT serves to encapsulate the lender's stake within the CREDIT protocol. Its key components include:

• Loan: This signifies the original amount that the lender has provided to the lending pool. Essentially, it's the principal amount of the loan that they've extended to borrowers within the pool.

• Interest: This constitutes the return that the lender earns over the loan period. It accumulates over time based on the interest rate agreed upon at the time of lending.

• Coverage: This represents the safety net provided to the lender in case of borrower default. If a borrower fails to repay their debt, this coverage comes into play to cover the lender's losses.

Settlement

In the CREDIT protocol, borrowers have the option to repay their debt prior to the loan's expiry date. However, as rational participants, they would only choose to do so if the value of their collateral exceeds the amount of their debt.

This is because, if the collateral's worth is greater than the debt, it is economically beneficial for the borrower to repay the debt and reclaim the collateral. Conversely, if the debt exceeds the collateral's value, a rational borrower would likely choose to default on the debt, given that the loss would be less than the value of the debt itself.

Thus, the decision of early repayment by borrowers in the CREDIT protocol is driven by the relative values of the debt and the collateral, a dynamic that underscores the importance of market conditions and asset valuation within the protocol.

Upon the expiration of a pool in the CREDIT protocol, all lending and borrowing activities cease and it's time for settlement. This is the point at which Liquidity Providers (LPs) can withdraw their liquidity. LPs burn their Liquidity Tokens to reclaim their assets and collateral. For instance, if you hold 10% of all the Liquidity Tokens, you are entitled to claim 10% of the asset and collateral tokens remaining in the pool, after the lenders' share has been distributed.

When a Credit pool reaches expiry, there are two parties awaiting to redeem their capital from the pool: Lenders and Liquidity Providers. The CREDIT protocol is designed such that lenders are prioritized to claim the assets first, and then LPs can claim the remaining assets. This structuring is known as Tranching. In this arrangement, lenders function as a Senior Tranche, and LPs act as Junior Tranches, meaning LPs claim their share only after lenders.

This structure is crucial because CREDIT loans are non-liquidatable, and some borrowers might default. In such scenarios, a pool might contain fewer assets (repaid by borrowers) compared to liabilities (owed to lenders). The remaining liabilities are compensated for using the borrowers' collateral. Consequently, there might be situations where LPs receive only collateral from the pool, particularly if lenders claim all the Asset tokens left after a high number of defaults.

For example:

Imagine a USDC-ETH pool that needs to repay 10,000 USDC, of which 7,000 is due to lenders and 3,000 to LPs. However, at expiry, there is only 9,000 USDC and 1 ETH in the pool. Lenders will be able to claim 7,000 USDC first, then LPs will proportionally share the remaining 2,000 USDC and 1 ETH.

A significant reason why LPs serve as Junior Tranche and not Senior Tranche is due to their role as market makers. This position allows LPs to create deeper liquidity even under unhealthy parameters to attract volume, such as in situations with very low Collateral Debt Position (CDP) or very high Annual Percentage Rate (APR), which could lead to bad debt and market imbalance. By being a Junior Tranche, LPs' incentives are better aligned towards creating a healthier market.

Partial and “Multi”-Repayments

We designed the Credit Position system in way that enables flexibility of partial and multi-repayments. Users have the ability to partially repay their loans prior to the pools expiry. This added customizability allows for greater control and management of a loan position. 

This means that if a user takes out a loan of 1000 ARB, they have the ability to repay back a portion of their loan and receive part of their collateral back at any given time before the pools expiry. Lenders benefit from this feature because it improves the user experience through a increased level of self management over their lending positions. Borrowers are also set to benefit from the feature because, over time more lenders will repay their debt in smaller portions over the course of the pool term. As a result, it reduces the default risk and lowers the chances of bad debt being incurred. 

The mechanism for partial payments is also a powerful foundation for more sophisticated and complex position management. It opens the door for self repaying loans, as well as the ability to offer multi-repayments, where users can repay their outstanding debt on multiple positions at once, in one smooth transaction. The CREDIT protocol will allow deploy this added functionality for self repaying loans and multi-repayments shortly after the launch on our customized appchain Meliora.  

Staking

The staking infrastructure is an integral part of our protocol, featuring a singular staking contract that allows for the staking of CREDIT tokens. It is designed to seamlessly work in conjunction with the various aspects of the protocol, including transaction fees and rewards generated by the respective pools, to offer users a unified and efficient staking experience.

The operational model for this mechanism is epoch-based, where each epoch spans over a duration of 30 days. The staking contract is designed to distribute any quantity of the three potential dividends tokens it accumulates: CREDIT, ARB, and ETH. This interaction between the staking contract and the protocol is indicative of the integral nature of the staking process in our protocol's ecosystem.

Flexibility is incorporated in the unstaking model, but it is structured to discourage early withdrawal through a scaled penalty system. The penalty for unstaking starts at 75% in the first week and gradually decreases to 50% and 25% in the second and third weeks, respectively. Stakers who hold their stakes until the fourth week can withdraw without incurring any penalties.

Strategy Vaults

The CREDIT Protocol offers a nuanced and complex core product that is its fixed pools. These pools are fundamentally designed for investors who can demonstrate patience and have an intelligent understanding of their capital. It caters specifically to those with idle or passive capital, those who prefer a longer-term time preference, and those who are apt at employing smart money strategies.

The liquidity providers (LPs) essentially drive this engine. It is vital for the $CREDIT token to have profound liquidity for the ecosystem to function optimally. This stipulates a key requirement for the LPs - they should not only possess a profound understanding of the system but also demonstrate a degree of patience. The fixed pools are constructed to be more attractive to larger players such as funds, venture capitalists, market makers, Decentralized Autonomous Organizations (DAOs), whales, and various projects. They are the ones that match our core product thesis, and who might show interest in custom pools.

However, acknowledging the diverse range of players in the DeFi ecosystem, The CREDIT Protocol presents another offering, specifically targeted towards the retail market - Vaults. The Vaults are designed to be less complex and more accessible, providing a more familiar experience for individual or retail investors. Yet, they carry the bonus of being beneficial to larger parties as well, particularly by offering liquidity provider (LP) hedging options.

CREDIT Token

The $CREDIT token serves as the backbone of our platform, offering a range of functionalities and benefits to its holders.

The $CREDIT token mechanics offer participants the opportunity to capture platform fees, earn rewards through staking, participate in platform governance, and engage in a token auction. These mechanisms aim to incentivize participation, enhance returns, and give users a voice in shaping the future of the platform.

Primarily, $CREDIT allows holders AND LPs to capture a substantial 30% each of all platform fees, presenting an unprecedented opportunity to augment earnings. As a $CREDIT holder, you can harness its potential to maximize your financial rewards, setting a new benchmark for benefits provided by a platform's native token.

The token also empowers holders with rewards and control over staking. The unique feature of our staking system is that it gives token holders the freedom to control staking emission rates. This implies that $CREDIT can be utilized to earn rewards while also ensuring that your investment is working relentlessly to yield maximum returns.

Another pivotal advantage of $CREDIT pertains to platform governance. By holding $CREDIT, you have the power to shape the future of the platform. Our vision is to create an ecosystem where decision-making power is distributed, and the $CREDIT token is the instrument to achieve this. Token holders will eventually have the ability to vote on crucial aspects such as the rebate percentage, fee division, establishment of new pools, and the launch of innovative products.

Basic Use-Cases

As a lender, what are some of the benefits CREDIT offers me?

1. Focus on a single token to reduce counterparty risk.

2. Include exposure to emerging tokens, and expanding investment portfolios.

3. Support early-stage projects without equity investments through debt financing 4. Generate interest through stablecoins and wrapped NFTs.

4. Leverage arbitrage opportunities using other lending and borrowing protocols.

As a borrower, what are some of the benefits CREDIT offers me?

1. Gain liquidity for any ERC-20 token and mitigate price volatility risks.

2. Utilize wrapped NFTs as collateral.

3. Borrow tokens for staking in other protocols and exploit arbitrage opportunities.

4. Open short positions without liquidation risks.

5. Borrow LP tokens for yield farming and open short positions without liquidation risks. 6. Access short-term liquidity while retaining token ownership.

6. Opt for loans instead of equity funding to support early-stage projects.

7. Obtain loans by securing them with LP tokens

8. Manage cash flows with fixed-term loans and borrow stablecoins to hedge risks.

As a liquidity provider, what are the benefits CREDIT offers me?

1. Stake your LP tokens and earn 30% of platform fees and $CREDIT emissions. 2. Access leverage by looping your LP tokens.

2. Avoid liquidation risk while shorting LP tokens.

3. Expand investment exposure by diversifying liquidity across multiple pools. 5. Contribute to lending ecosystem stability and effectiveness.

4. Earn transaction fees and generate income through liquidity provision. 7. Minimize impermanent loss with careful liquidity provisioning.

5. Lend and borrow within LP pair pools.

6. Provide collateral using LP tokens from various protocols.

AND MORE…

What’s Next?

In the coming days we will be onboarding the first cohort of beta testers for The CREDIT Protocol and the Meliora Appchain. Stay tuned by following our socials!

Resources

Volatilis Website
Volatilis Twitter

CREDIT Twitter

Meliora Website
Meliora Twitter