Flow is a peer-to-pool lending protocol implemented in Aiken on Cardano. It enables users to deposit assets as collateral, borrow against them, and interact with a common pool that manages liquidity, interest, and risk. The protocol is designed for efficiency, security, and composability, supporting batched order execution and flexible collateral management.

• Vault: Tracks user-specific borrow positions, collateral, and loan state.
• Pool: Manages global liquidity, borrows, reserves, and cToken issuance.
• Order: Encapsulates user intent for actions (deposit, withdraw, borrow, repay, liquidate) and enables batching.
• cToken: Synthetic token representing user deposits, minted/burned on deposit/withdrawal.
• Pool Info: Stores pool configuration, supported assets, interest model, and collateral parameters.
• Authorization Tokens: PoolAuthToken and VaultAuthToken enforce access control and validate pool/vault UTxOs.
• Batcher: Processes orders in batches, ensuring atomic execution and correct indexing.

• Purpose: Stores user-specific borrow state tied to a lending pool.
• Datum: VaultDatum
  • pool_id: OutputReference – Pool association.
  • borrow_id: OutputReference – Unique loan instance.
  • owner_pkh: PubKeyHash – User's public key hash.
  • owner_stake_key: Option<PubKeyHash> – Optional stake key for rewards.
  • collateral_amount: Int – Amount of collateral posted.
  • collateral_asset: Asset – Collateral asset type.
  • interest_rate: Int – Fixed interest rate at loan start.
  • start_time: Int – Borrow start timestamp.
  • principal: Int – Borrowed amount.

Each VaultDatum enables per-loan interest accrual, collateral enforcement, and liquidation, ensuring separation between pool-level and user-level accounting.

• Datum: PoolDatum

  • pool_id: OutputReference – Pool instance ID.
  • total_supplied: Int – Total supplied liquidity.
  • total_borrowed: Int – Outstanding borrows.
  • reserve: Int – Protocol-held reserves.
  • total_ctoken: Int – cTokens in circulation.

• Redeemers:

  • ApplyDeposit, ApplyWithdraw, ApplyBorrow, ApplyRepay, ApplyLiquidate

• Purpose: User-intent wrapper for action batching.
• Datum: OrderDatum (Enum)
  • ODeposit, OWithdraw, OBorrow, ORepay, OLiquidate

• Purpose: Synthetic token representing user deposits.

• Lifecycle: Minted on deposit, burned on withdrawal. Tracks user share of pool liquidity.

• Profit: When a user withdraws, the cToken is redeemed at a higher exchange rate than when deposited—representing earned interest from borrowers.

  underlying_received = ctoken_amount × (total_supplied / total_ctoken)

• Purpose: Parameters and configuration for each lending pool.
• Datum: PoolInfoDatum
  • pool_id: OutputReference – Pool identifier.
  • envelope_amount: Int – Minimum batch size for execution.
  • pool_asset: Asset – Borrowed asset (debt token).
  • ctoken: Asset – cToken for depositors.
  • vault_authtoken: Asset – Vault authorization token.
  • batcher_policy_id: ByteArray – Restricts order processing to authorized batchers.
  • vault_script_hash: ByteArray – Expected vault script hash.
  • pool_stake_key: Option<PubKeyHash> – Optional reward key.
  • reserve_factor_percentage: Int – Protocol reserve share.
  • collateral_infos: List<CollateralInfo> – Supported collateral types and parameters.
  • kink: Int – Utilization point for interest curve change.
  • base_rate: Int – Minimum interest rate.
  • slope_low: Int – Interest slope before kink.
  • slope_high: Int – Slope after kink.

• PoolAuthToken: Validates pool UTxOs and restricts pool operations.
• VaultAuthToken: Validates vault UTxOs and restricts vault operations.

• Purpose: Applies orders in batches atomically, enforcing correct order and access control via redeemers.

• Jump Rate Model:
  • Low utilization: Gradual interest increase (slope_low).
  • Above kink: Steep interest increase (slope_high).
• Mechanics:
  • Uses interest_index for compounding.
  • Normalized by year_in_milliseconds constant.

Let:

• U = utilization = total_borrowed / total_supplied
• kink = utilization threshold
• r_borrow = interest rate charged to borrowers

Then:

if U ≤ kink:
    r_borrow = base_rate + slope_low × U
else:
    r_borrow = base_rate + slope_low × kink + slope_high × (U - kink)

• This model encourages borrowing when utilization is low and discourages it when high.
• Interest accrues to the pool continuously and is distributed to depositors via cToken value growth.

1. Deposit: Mint cTokens, increase total_supplied.
2. Borrow: Update vault principal, increase total_borrowed.
3. Repay: Reduce principal, update interest.
4. Withdraw: Burn cTokens, adjust liquidity.
5. Liquidate: Seize undercollateralized collateral.

• Purpose: Ensures up-to-date collateral pricing and liquidation checks.
• Required for:
  • Collateral ratio enforcement
  • Liquidation validation

• User actions: Require user signature for orders.
• Auth tokens: Restrict mint/burn to valid pool/vault operations.

• Collateral types: Configurable via PoolInfoDatum.
• Interest model: Adjustable via pool parameters.
• Batching: Supports atomic multi-action execution for efficiency.