Lending powered by Ola Finance: A New Paradigm in DeFi on Fuse.

  • Launching Wednesday 26th May at 9 am UTC.
  • Supported currencies: FUSE, WETH, WBTC, USDC.

It’s the moment many of you have been waiting for …. the first-ever lending protocol on Fuse Network is set to launch this week!

In this article, we explain how the new DeFi protocol is different from existing services as well as explaining the rules and configurations that have been put in place.

Difference from Protocols like Compound

While Fuse Lending Network is similar to lending networks like Compound in some respects, there is one major difference worth mentioning.

Ola Finance provides the ability is to create isolated instances of lending networks.

Compound, Aave, and other liquidity protocols are single, albeit large, instances in which all assets are pooled together. This can be beneficial in terms of aggregating liquidity in one place and increasing total value locked (TVL) on one lending protocol. However, this approach is restrictive when it comes to the type of assets which can be added.

As explained in our previous article, Ola Finance solves this by providing a “Network of Lending Networks” in which isolated instances are created and various smaller cap assets can be added.

To accommodate less liquid tokens, Ola Finance runs a “protector bot” whose purpose is to detect price anomalies and trade against them. It’s an off-chain service that other pirates are also welcome to run. Protector bot funds are provided by the entity that launches the lending network, in this case, Fuse Foundation. This resembles the way that market makers are funded on centralized exchanges.

The lending protocol launching this Wednesday will be the first of many, as we plan to create new instances, based on demand, that allow various tokens — including those created by payment communities launching on Fuse Network – to be supplied, borrowed, and used as collateral.

This new, innovative, and much more inclusive approach to decentralized liquidity protocols, coupled with the game-changing strategies that liquidity providers are able to execute on Fuse Network between lending and pooling on FuseSwap — makes us very excited about what the future holds!

How it Works

Supplying Assets

Like similar DeFi lending protocols, Fuse Lending Network is permissionless meaning that anyone can deposit one or more of the supported currencies into the network’s lending pool in order to earn APY.

The assets supported on both the lending and borrowing side are the same:

  • Wrapped BTC (WBTC)
  • Wrapped Ether (WETH)
  • USD Coin (USDC)
  • Fuse Token (FUSE)
https://app.ola.finance/fuse/networks

When you “supply” assets, making them available as part of the pool for people to borrow, you receive “oTokens” representing your share of the asset deposited in the lending pool. oWBTC, oWETH, oUSDC, oFUSE, etc are interest-bearing assets, as they entitle the lender to both the principal they originally deposited plus a portion of the interest that borrowers pay.

Liquidity providers will be incentivized via airdrops of Fuse Token (FUSE). More information concerning this will be provided once the platform has gone live.

Borrowing Assets

The minimum equivalent amount that can be borrowed in any asset is $50.

In order to borrow on the network, you must first deposit sufficient collateral in one of the supported assets in excess of the amount of the loan. This is standard practice in decentralized lending, adopted to minimize loan defaults in the absence of realistic third-party enforcement. The loan and its collateral are usually called a collateralized debt position (CDP).

The collateral factor is an important parameter that determines how much a user is allowed to borrow against a particular collateral type. The initial collateral factors for borrowing assets on Fuse Network are as follows:

  • WBTC = 70%
  • WETH = 70%
  • USDC = 75%
  • FUSE = 20%

For example:

The borrower provides 1 WETH as collateral at a unit price of $2,000 meaning a collateral amount of $2,000. In this case, $1,400 worth of any asset (70%) can be borrowed from the borrow markets (providing there is enough liquidity).

Liquidation

The liquidation factor determines in which case a collateralized debt position (CDP) is subject to liquidation. The initial liquidation factors for assets on Fuse Network are as follows:

  • WBTC = 75%
  • WETH = 75%
  • USDC = 75%
  • FUSE = 40%

For example:

1 WETH = $2,000.

$1,400 worth of USDC is borrowed against 1 WETH ($2,000). When the value deposited in WETH = $1866.6666 (1400$/0.75) the CDP becomes eligible for liquidation.

Liquidation means that a third party (liquidator) repays up to half of the loan and receives the equal value of collateral plus a fee. The remainder of the loan and the collateral remain. More details are provided below on liquidator incentives and this article explains how things work behind the scenes.

⚠️ Warning! In light of the liquidation risk, borrowers need to carefully monitor their CDPs to ensure that they remain sufficiently collateralized.

Capped Assets

Fuse Lending Network will feature a cap on enabled collateral for certain assset types. In this case, Fuse Token (FUSE) being a lower cap asset with less volume and liquidity than assets such as Wrapped Ether and USD Coin, a maximum of $100,000 worth of Fuse Token can be used as collateral. This means that if this ceiling is reached, borrowers will no longer be able to use the asset in question to secure their loans.

Loan Repayment

A CDP can be closed at any point by repaying the loan and the accrued interest rate. The interest rate for a given asset on Fuse Lending Network is determined automatically by the smart contract based on the supply and demand for that asset.

Initial Lending Protocol Configurations

Ask Me Anything

We will be conducting an AMA (ask me anything) in collaboration with our partners at Ola Finance later this week, once community members have had the opportunity to test this new product. Click here to register.

Fuse Lending Network is set to launch on Wednesday, 26th May at 9 am UTC. Stay tuned for the upcoming article in which we will provide a detailed guide on how to participate!

Follow our social media channels to stay updated on recent news and developments at

Thanks to Isaac Rodgin

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