A multi-mode lending protocol on 0G Network with three-tier collateral isolation, algorithmic interest rates, and flash loan support. Supply assets to earn yield or borrow against your portfolio with configurable risk parameters.

Architecture

Protocol Architecture

Bond Lending is composed of modular smart contracts deployed on the 0G Network. User-facing operations are routed through the LendingInterface, which coordinates with the LendingManager for accounting, the LendingVaults for asset custody, and the Oracle for price feeds.

LendingManager

Core controller. Manages registered assets, user positions, lending modes, health factors, and liquidation logic.

LendingInterface

User-facing entry point for all operations: supply, withdraw, borrow, repay, flash loans, and health factor queries.

CoinFactory

Creates synthetic receipt tokens (deposit coins and loan coins) that track your collateral and debt positions with accrued interest.

LendingCoreAlgorithm

Interest rate model. Calculates supply and borrow APY based on pool utilisation, optimal ratios, and reserve factors.

LendingVaults

Asset pool custody. Holds all deposited tokens and manages the flow of assets during supply, withdrawal, borrow, and repay operations.

Oracle

Price feeds for all registered assets. Supports Chainlink-compatible feeds and custom price sources. All prices are denominated in USD with 18-decimal precision.

Collateral Isolation

Lending Modes

Bond Lending implements three distinct collateral strategies. Your lending mode determines how collateral is valued, what assets you can combine, and which liquidation thresholds apply. You can switch modes at any time, provided your existing positions satisfy the constraints of the target mode.

MODE 0

High Liquidity (Cross-Margin)

The default mode. Borrow against multiple diverse collateral assets simultaneously. Each asset uses its standard maximum LTV as the collateral factor. Health factor is computed as the weighted sum of all collateral values divided by total borrowed value.

• Multiple collateral assets contribute to borrow capacity

• Each asset valued at its individual maximumLTV (e.g. 70%, 80%)

• Liquidation triggers at health factor < 1.0

• Most flexible — suitable for diversified portfolios

MODE 1

Risk Isolation (Single-Collateral)

Designate exactly one asset as your sole collateral. Borrowing is limited to this single asset's backing. The protocol applies a stricter liquidation floor and may cap total borrow exposure via maxLendingAmountInRIM. Ideal for high-risk or volatile collateral assets where you want to contain blast radius.

• One designated collateral asset per position

• Borrow capacity capped by maxLendingAmountInRIM

• Higher liquidation floor than Mode 0

• Limits protocol exposure to a single volatile asset

• Must designate the collateral asset when switching to this mode

MODE 2+

Homogeneous Grouping (Correlated Assets)

Group correlated assets together for higher combined LTV. Assets within the same homogeneous group (e.g. stablecoins: USDT + USDe) share a group-specific LTV parameter (homogeneousModeLTV) that is typically higher than individual LTVs, enabling greater capital efficiency for low-volatility pairs.

• Collateral must be from the same homogeneous group (e.g. Mode 2 = stablecoins)

• Group-specific LTV (homogeneousModeLTV) — usually higher for correlated assets

• Higher leverage for paired, correlated positions

• Each additional mode number (2, 3, 4...) represents a distinct asset group

Operations

Supply and Borrow Flow

Supplying Assets

When you supply tokens, they are deposited into the LendingVaults. The CoinFactory mints synthetic deposit coins that represent your share of the pool. These deposit coins accrue interest over time — the exchange rate between deposit coins and the underlying asset increases continuously based on the supply APY. Your deposit can optionally serve as collateral for borrowing.

Approve protocol terms (one-time). This authorises the LendingInterface to act on your behalf.

Approve the ERC-20 token for the deposit amount. Native 0G tokens do not require approval.

Preview the transaction. The interface shows your projected health factor and updated APY.

Execute the deposit. For ERC-20 tokens: assetsDeposit(). For native 0G: assetsDeposit2() with value attached.

Deposit coins are minted to your address. Interest begins accruing immediately.

Borrowing Assets

Once collateral is supplied, you can borrow other assets up to your borrow limit. The maximum borrow amount is determined by your collateral value weighted by each asset's maximum LTV. The protocol mints loan coins (synthetic debt tokens) that track your outstanding balance with accrued interest.

Verify your lending mode is set correctly. Mode changes may be required for certain collateral configurations.

Check available liquidity for the asset you wish to borrow. The pool must have sufficient idle capital.

Preview the impact on your health factor. The interface simulates the post-borrow state before execution.

Execute the borrow. Loan coins are minted to track your debt. The borrowed tokens are transferred to your wallet.

Repay and Withdraw

Repayment burns your loan coins and reduces your outstanding debt. You can repay a partial amount or use the max repay function to close the entire position (accounting for accrued interest at the time of transaction). After repayment, you may withdraw collateral — the protocol checks that your remaining collateral still supports any remaining debt with a sufficient health factor margin.

Risk Management

Health Factor

The health factor is the ratio of your risk-adjusted collateral value to your total outstanding debt. It is the primary metric governing liquidation eligibility.

Health Factor =

Sum( Collateral_i x Price_i x LTV_i ) / Sum( Debt_j x Price_j )

Example: 100 USDC (LTV 70%) + 0.5 ETH @ $2,000 (LTV 80%)

Collateral = (100 x 0.70) + (1,000 x 0.80) = 70 + 800 = $870

Debt = 400 USDC = $400

Health Factor = 870 / 400 = 2.175 (safe)

> 2.0

Safe

Comfortable buffer above liquidation. Moderate asset price movements will not trigger liquidation.

1.0 – 2.0

Moderate Risk

Position is exposed to market volatility. Consider reducing debt, adding collateral, or narrowing your mode.

< 1.0

Liquidation Zone

Position is eligible for liquidation. Any external party can repay a portion of your debt and seize discounted collateral.

Liquidation

Liquidation Mechanics

When a borrower's health factor drops below the protocol floor (1.0 in High Liquidity mode, higher in Risk Isolation mode), any external party can trigger a liquidation. The liquidator repays a portion of the borrower's debt and receives the equivalent collateral at a discount determined by the liquidation penalty.

Liquidation Call

The liquidator specifies: (1) the borrower's address, (2) the debt asset to repay, (3) the amount to repay, and (4) the collateral asset to seize. The protocol validates the borrower is below the health factor floor before executing.

Collateral Seizure

The liquidator receives collateral worth: repaidDebt x (1 + liquidationPenalty). For example, with a 10% penalty, repaying $1,000 of debt yields $1,100 worth of collateral — the $100 spread is the liquidator's profit.

Bad Debt

If a borrower's collateral is exhausted before the debt is fully covered, the remaining debt is marked as bad debt. The protocol absorbs this loss through its reserve fund.

Interest Rates

Interest Rate Model

Bond Lending uses a two-tier interest rate curve governed by pool utilisation. When utilisation is below the optimal ratio (bestLendingRatio), rates increase gradually. Above the optimal ratio, rates increase sharply to incentivise repayment and new supply. This mechanism ensures sustainable liquidity across all market conditions.

Supply APY

Interest earned by suppliers. Determined by the current utilisation rate and the bestDepositInterestRate parameter. Higher utilisation means higher supply APY. Accrues continuously via deposit coin exchange rate appreciation.

Borrow APY

Interest owed by borrowers. Always higher than supply APY due to the reserve factor. The protocol retains a percentage of borrow interest as revenue. Tracks via loan coin exchange rate growth.

Utilisation Rate

Total Borrowed / Total Supplied. The primary driver of both supply and borrow APY. As utilisation increases, rates rise to attract more suppliers and discourage further borrowing.

Optimal Utilisation (bestLendingRatio)

The target utilisation rate where the interest curve inflects. Below this point, rates increase linearly. Above this point, rates increase exponentially to create strong repayment incentives.

Reserve Factor

The share of borrow interest retained by the protocol. Funds the reserve pool for bad debt coverage and protocol development. Remainder distributed to suppliers.

Token Mechanics

Receipt Tokens (Deposit Coins / Loan Coins)

Bond Lending uses synthetic receipt tokens to track positions. The CoinFactory contract creates two token types per registered asset:

Deposit Coins

Minted when you supply assets. Their exchange rate to the underlying asset increases over time as interest accrues. When you withdraw, deposit coins are burned and you receive more of the underlying than you originally deposited. Equivalent to aTokens in Aave.

Loan Coins

Minted when you borrow assets. Their exchange rate increases as interest accrues on your debt. When you repay, loan coins are burned. The growing exchange rate means your effective debt grows over time. Equivalent to variable debt tokens in Aave.

Parameters

Per-Asset Risk Parameters

Each asset registered in the protocol has individually configurable risk parameters. These are set by protocol governance and determine collateral eligibility, borrow limits, and liquidation behaviour.

Maximum LTV (maximumLTV)

The percentage of collateral value that can be borrowed against. A 70% LTV means $10,000 in collateral supports up to $7,000 in borrows. Expressed in basis points on-chain.

Liquidation Penalty (liquidationPenalty)

The discount a liquidator receives on seized collateral. A 10% penalty means liquidators pay $900 of debt to receive $1,000 of collateral. Higher penalties incentivise faster liquidation.

Risk Isolation Cap (maxLendingAmountInRIM)

Maximum borrow amount permitted in Risk Isolation Mode for this asset. Caps protocol-wide exposure to volatile or newly listed assets.

Homogeneous Group LTV (homogeneousModeLTV)

The LTV applied when the asset is used within a homogeneous group (Mode 2+). Typically higher than maximumLTV for correlated asset pairs like stablecoin groups.

Lending Mode Number (lendingModeNum)

Classifies the asset into a lending mode group. Mode 0 = standard cross-margin, Mode 1 = isolatable, Mode 2+ = specific homogeneous groups.

Optimal Utilisation (bestLendingRatio)

The target utilisation rate for the interest rate curve inflection point. Per-asset parameter allowing different rate profiles for different risk tiers.

Base Deposit Rate (bestDepositInterestRate)

The deposit interest rate at optimal utilisation. Anchors the interest rate curve for this asset.

Reserve Factor (reserveFactor)

Percentage of borrow interest retained by the protocol for this asset. Ranges from 5% to 30% depending on asset risk profile.

Advanced

Flash Loans

Bond Lending supports flash loans — uncollateralised borrows that must be repaid within a single transaction. Flash loans access the full liquidity of the lending pool and are commonly used for arbitrage, collateral swaps, and self-liquidation. The protocol charges a flash loan fee that is distributed to suppliers. Flash loans use a custom interface (not EIP-3156) and require the borrower to deploy a callback contract.

Native Token

0G Native Token Handling

The 0G Network's native token (A0GI on testnet, 0G on mainnet) requires special handling since ERC-20 interfaces expect token contracts. Bond Lending provides dedicated payable entry points for all native token operations. When you supply, borrow, repay, or withdraw native tokens, the protocol automatically wraps and unwraps through the w0G (wrapped 0G) contract. This is handled transparently in the Bond interface — you interact with native 0G tokens directly and the wrapping is abstracted away.

Assets

Supported Assets

The following assets are currently registered in the Bond Lending protocol on 0G mainnet. Each asset has individually configured risk parameters, interest rate curves, and oracle price feeds.

w0G

Wrapped 0G

Native gas token. Primary collateral asset with competitive LTV.

st0G

Staked 0G

Liquid staking derivative. Eligible as collateral in standard and homogeneous modes.

USDT

Tether USD

Major stablecoin. High LTV, eligible for stablecoin homogeneous grouping (Mode 2+).

USDe

Ethena USDe

Synthetic dollar. Available for supply and borrow with standard risk parameters.

Oracle

Price Oracle

The Oracle contract provides USD price feeds for all registered assets. Prices are stored with 18-decimal precision (e.g. ETH at $2,000 = 2000 x 10^18). The oracle supports Chainlink-compatible feed interfaces and custom price sources. All health factor calculations, borrow limit checks, and liquidation eligibility assessments use oracle prices as the source of truth. Oracle prices are updated at every interaction that touches an asset.

Smart Contract Security

Bond Lending contracts are deployed on the 0G Network and are publicly verifiable on-chain. The protocol is undergoing formal security audit. Audit results will be published here upon completion.