Lending

Lending & Borrowing on LayerBank

How LayerBank Works

LayerBank is a decentralized money market built on an over-collateralized lending model, allowing users to:

When users supply assets to LayerBank, they receive lTokens representing their share of the pool.

Initial Exchange Rate: lTokens start at 1:1 with the underlying asset (e.g., 1 USDC = 1 lUSDC).
Accrued Interest: Over time, the exchange rate increases as interest accrues (e.g., 1 USDC = 1.03 lUSDC).
Redemption: When withdrawing, users redeem lTokens for their share of the underlying asset plus accrued interest.

lTokens effectively track your position and the interest earned automatically.

To open a borrow position, users enable collateral on their supplied assets.

Borrow Limit: Determined by the Max LTV (Loan-to-Value) of the collateral.
Interest Accrual: Borrowed amounts grow over time according to the Borrow APR.
Example:
- Deposit 100 USDC → Receive lUSDC representing your deposit
- Borrow 50 USDC → Owed amount grows as interest accrues
- To close the position, repay the borrowed amount (plus interest) and withdraw remaining collateral

Risk Note: If the collateral value drops and exceeds the Max LTV threshold, the position can be partially liquidated to maintain solvency.

LayerBank operates in a fully on-chain, code-driven environment with no intermediaries.

Utilization-Based Rates: Borrow/Supply APRs adjust automatically according to pool utilization.
Goal: Keep liquidity healthy — higher rates at high utilization attract more suppliers and encourage debt repayment.
Result: A self-balancing money market with optimized capital efficiency.

Trustless & Automated: 100% smart contract based, no centralized custody
Capital Efficiency: Borrow up to the Max LTV while keeping collateral secure
Transparent Yield: lTokens make interest accrual transparent and verifiable on-chain

Last updated 1 month ago