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DeFrag

DeFrag

DeFrag is a decentralized finance (DeFi) protocol that enables users to borrow USDC against a variety of crypto assets, including fungible tokens and NFTs. The protocol utilizes a dynamic APR pricing model based on the Black-Scholes formula, which adjusts borrowing fees based on the loan-to-value (LTV) ratio to incentivize safer borrowing. It also features Underwriting Liquidity Pools (ULPs) where users can supply USDC to earn interest from borrowers. The platform is governed by the DeFragDAO.
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Description

DeFrag is a decentralized finance (DeFi) protocol on the Arbitrum network that allows users to borrow USDC against a diverse range of collateral, including fungible tokens (like MAGIC, ARB, GMX) and various NFT collections. The protocol's core feature is its dynamic Annual Percentage Rate (APR) calculation, which uses the Black-Scholes model to set borrowing costs based on the loan-to-value (LTV) ratio, making lower-risk loans more affordable. DeFrag also incorporates Underwriting Liquidity Pools (ULPs), allowing anyone to supply USDC and earn a share of the interest fees paid by borrowers. To ensure accurate loan valuation and risk management, the protocol utilizes dedicated price oracles, such as Chainlink, and has a defined liquidation process for undercollateralized loans. Governance of the protocol is managed by the DeFragDAO, with its Metamaticians NFT holders participating in decision-making.