Markets & Vaults
Last updated
Last updated
Markets are the core of the Dahlia protocol. Unlike traditional lending platforms, Dahlia markets are isolated and permissionless, allowing any user to create a market between two ERC-20 tokens. This flexibility expands opportunities for long-tail DeFi assets, maximizing both risk management and liquidity options.
Every Dahlia market is defined by a set of parameters:
Collateral: The ERC-20 asset used as collateral.
Loan Asset: The ERC-20 asset borrowed against the collateral.
Interest Rate Model (IRM): A smart contract that dictates how interest rates are adjusted based on utilization and market conditions.
Oracle Contract: A contract that provides real-time price data for the collateral and loan asset, ensuring accurate loan-to-value calculations.
LLTV (Liquidation Loan-to-Value): The threshold ratio at which a loan is liquidated, representing the maximum loan amount as a percentage of collateral value. Exceeding this ratio may result in liquidation.
Liquidation Bonus: The percentage of collateral paid to liquidators during a liquidation event. This bonus incentivizes third-party participants to execute liquidations when necessary.
Market Admin: A role assigned to the deployer's address by default, which can be reassigned to another address. The Market Admin manages specific parameters, including pausing/unpausing the market, adjusting the liquidation bonus, and managing Royco Vault rewards.
This parameterization gives Dahlia a high degree of flexibility, encouraging innovative market creation while maintaining robust safeguards for participants.
Dahlia’s integration with Royco’s ERC-4626 WrappedVaults makes it easier to keep your funds working for you. By combining yield-bearing vaults with isolated lending markets, lenders can earn interest on one market while placing limit orders in another. If certain price or yield conditions aren’t met right away, your assets won’t sit idle—they continue accruing returns in the Royco-Dahlia Vault.
Dahlia’s WrappedVault remains fully compatible with all of Royco’s original features, including:
Rewards Campaigns: Set up additional incentive programs to encourage more lending activity.
Limit Orders: Create limit orders targeting specific interest rates on various assets to help you earn the yields you want.
Having the ability to set limit orders and maintain yield at the same time offers more flexibility. Lenders can explore different markets and strategies without pausing their earnings, while borrowers benefit from a market that consistently remains more active and liquid.
Earn While Setting Limit Orders: Lenders can create limit orders across different markets while still earning yield in another active market. This ensures that funds are never idle, maximizing returns even when lenders are targeting specific rates elsewhere.
More Liquidity for Borrowers: Borrowers benefit from increased liquidity because lenders can have active limit orders while still earning yield. This provides more borrowing options and mitigates some of the constraints typically found in isolated lending pools.
To learn more about Royco's native features, visit the Royco Documentation.
