Market Participants

Last Updated on Mar. 6, 2024

Pawnor / Debit Side

• Introduction:

  • Users can mortgage their assets and obtain collateral value and redemption certificates (Covered Call Option Certificate) through the Ducklend protocol, similar to traditional lending protocols. However, unlike other lending protocols, Ducklend does not have a passive auction of mortgage assets due to insufficient margin.

  • This means that price fluctuations will not affect the security of the pledgers' underlying assets.

• Mortgage assets:

  • After the user mortgages assets and pays the option fee, the Ducklend protocol returns the collateral value in Stablecoins (USDT / USDC) and the Covered Call Option Certificate to the user's address.

• Redemption:

  • Users can redeem mortgage assets by paying interest at any time during the option's holding period until the option expires.

Options Trader

• Introduction:

  • Users can now obtain the Covered Call Option Certificate via Ducklend protocol's flash loan function without pledging their assets.

• Buy option:

  • The Duckelend protocol provides users with flash loan services, which require users to pay flash loan handling fees and option fees to obtain the Covered Call Option Certificate.

• Settlement option:

  • If the value of the mortgaged assets rises to a profit range, the user can pay interest to realize the profits.

  • If the mortgage asset depreciates, the option will be worthless and automatically settled by the arbitrageur upon expiration.

• Adding leverage:

  • Users can increase leverage with one click and cycle mortgage assets (using free assets or flash loan services) to obtain multiple covered call options.

Liquidity Provider / Credit Side

• Introduction

  • Liquidity providers inject USDC/USDT liquidity into the Limited Trading Pool to obtain the LP token of the Limited Trading Pool, thereby obtaining income.

• Revenue

  • Interest income

  • Options trading fees

• Risk

  • Ducklend offers high-interest rates and options trading. Mortgage assets won't be liquidated before option certificates expire, and liquidity providers bear responsibility for option purchases. Devaluation of collateral may cause partial losses.

  • Under extreme conditions, users' mortgage assets drop significantly, exceeding the prepaid interest and impacting the liquidity provider's principal.

• Redemption

  • Liquidity providers can redeem liquidity at any time based on the proportion of the existing Limited Trading Pool.

Arbitrageur

• Introduction

  • If the user fails to repay the interest and the option expires, meaning if the option expires and the user does not exercise it, their mortgaged assets will be kept in Ducklend's decentralized pawn shop until they are auctioned.

  • Ducklend will bundle together the mortgaged assets and the interest (DET) that needs to be repaid, and then auction them off.

• Qualification

  • Addresses holding more than 1% of the total amount of Duckcoin can settle expired option contracts and obtain the market price difference.

• Auction mechanism

  • Ducklend auctions expired options using a Dutch auction model. The principal and interest that needs to be returned is discounted by approximately 2% every Block until the arbitrageur settles the expired asset package.