rUSDC Instances

rUSDC exists on partner chains that have received USDC deposits or minted rUSDC through borrowing.

We introduce a new token standard that extends the existing ERC20 standard, and simplifies the lending experience. In the new standard all token holders are lenders by default. Borrowers borrow from the token contract itself, which in turn, mints additional token supply upon a borrow operation and transfers it to the borrower.

The utilization ratio is defined as the ratio between the total borrowed supply and the total token supply. A utilization of 50% suggests that the borrow amount equals the supply amount. We illustrate the utilization ratio with the following example:

Example 2.2

Consider a rUSDC (rUSDC.x) with total supply of 100 rUSDC.x at launch (t = 0).

At t = 1, a user decides to borrow 25 rUSDC.x.

After this operation total supply inflates to 125 rUSDC.x, and total borrowed supply is 25 xUSD. The utilization ratio is 25/125 = 0.2.

At t = 2, another user borrows 75 rUSDC.x.

The total supply is now 200, total borrowed supply is 100, and the utilization is 100/200 =0.5. However, the rUSDC Token Standard allows for additional borrowers.

At t = 3, 500 rUSDC.x are borrowed, and the new utilization ratio becomes 600/700.

As illustrated by the example, the borrow operation inflates the total supply of the rUSDC. In order to cap the size of inflation, the token contract can define the maximum utilization ratio. Where a utilization ratio of 1 implies that the maximum inflation is infinite.

Collateral factor is always smaller than 1.

For the long term, any additional minting is not expected to change the price of a rUSDC, as all minted supply is subject to an interest rate, and each borrower is expected to repay their debt.

The token standard does not dictate which assets can be used as collateral to borrow rUSDC. Nor does it dictate the interest rate curve or the collateral factors. Instead, it delegates a minting permission to a dedicated minter. The minter is a trusted entity or a smart contract, which make sure the debt is always over collateralized and also serves as a monitoring committee that dictates the interest rate and maximum utilization ratio. Typically, the minter is a lending market that is controlled by a trusted risk curator or DAO.