What is FILLiquid
FILLiquid is a fully open-sourced, decentralized, algorithm-based liquidity pool and leasing platform implemented on the Filecoin Virtual Machine (FVM). It facilitates a market that enables FIL token holders to stake their tokens and earn passive interest income while also providing SPs with the ability to borrow FIL tokens for storage provisioning.
FILLiquid distinguishes itself from other leasing markets as it does not require SPs to collateralize fiat currencies or other digital assets to secure a FIL loan. Instead, FILLiquid employs the SPs’ existing account balances and future income as collateral, allowing them to take FIL loans without increasing their financial burdens.
Specifically, the FILLiquid smart contract employs the SPs Beneficiary Address, which results in the potential income from storage mining being pledged to the protocol while the loan is outstanding. The Beneficiary Address also contains the previous FIL pledges to the protocol, which can be used as collateral to secure FIL loans.
Taking leasing protection one step further, all FIL borrowed on FILLiquid can only be used to expand storage capacity. As a result, all FIL borrowed by SPs also enters the Beneficiary Address as it is used for pledging, meaning lenders are always fully protected in the event of a liquidation.
The borrowing interest rate on FILLiquid is dynamically adjusted based on the market conditions relating to the supply and demand of utilization. A higher demand for borrowing FIL increases the utilization rate of the liquidity pool, resulting in higher borrowing interest rates. Conversely, a higher amount of FIL staked reduces the utilization rates, lowering the borrowing interest rate.
Essentially, the FILLiquid liquidity pool lowers the entry barrier for SPs seeking to borrow FIL for power growth and FIL token holders looking to earn a passive income through staking. The protocol acts as a bridge between lenders (FIL token holders) and borrowers (SPs).
FILLiquid will bring unprecedented liquidity to the Filecoin market and help the network achieve its goals in incentivizing a global network of computer operators to provide file sharing and storage services. FILLiquid will increase liquidity and reduce the cost of storage power growth to ensure consistent storage capacity expansion on Filecoin.