Larix AMA Recap
Larix is a lending protocol on the Solana blockchain, it has adopted a dynamic interest rate model, and created more capital-efficient risk management pools, as such a broad selection of collateral types can be fully utilized in a safe way.
On September 15th, Larix CMO, Dimi, joined us to answer our questions.
Dimi, Larix CMO
Larix is the first lending protocol on Solana that accomplished basic lending/borrowing functions in conjunction with a platform token distribution function. For now, we have 15k mainnet users and had 47k testnet users prior.
We are very proud to be the first lending protocol on Solana who accomplished a mining dev as well as an Audit.
Questions from the CryptoRank team
#1. Could you give us a short introduction of Larix and why you chose Solana?
Dimi: – Larix is the lending protocol where users can participate as suppliers or borrowers on the Solana chain. Larix adopted a dynamic interest rate model and created capital-efficient risk management pools, as such a broad selection of collateral types that can be fully utilized in a safe way. Furthermore, the LARIX token, based on a delicately designed token economy, enables continuous incentive allocation to boost real demands.
Solana now is on its way to becoming a very popular public chain for the Defi world due to its lower trading fees and faster transaction speeds. At the heart of Solana’s ascendancy is the Proof of History algorithm leveraging SHA256, which enables a throughput of higher than 50,000 TPS, averaging 400–600ms block time, having 900+ nodes globally, with an extremely low transaction fee of ~$0.00025. For now, Solana has already built a strong ecosystem occupying a range of projects: Defi, Cross-chain assets, Gaming, and NFTs.
Dimi: – We considered that initially. Larix will support Solana native SPL tokens. So here is our plan moving forward.
In phase1, we only accept the most popular cross-chain assets with large market caps, like BTC, ETH, USDC, USDT, and SOL. The reason is for the safety of the users and to mitigate any potential liquidity risks on the platform. Hence, stability, security, and longevity are our core focus.
In phase2, Larix will move on to accept synthetic assets like indexes, gold, and stocks. Indexes are a good way to give users an added layer of guarantee, to collaborate cross-chain assets with SPL tokens, for example, the ‘BTC-SOL-RAY-USDC’ index. An amazing project building this at the moment is Symmetry, and we looking forward to collaborating with them on this.
In phase3, Larix will begin to accept NFTs as P2P lending. NFT now is a huge market and have locked a large amount of token value. We want to give NFT holders the chance to collateralize their appreciating collectibles and be able to borrow against that value.
#3. It sounds cool, but what do you mean by “for users’ safety?”
Dimi: – Safety and Longevity. You see, if you support tokens that have a market cap of only 10m for example, it raises the risk of manipulation and radical price fluctuations. When that kind of token is collateralized on the Larix protocol and suffers a fatal drop in price, you have to bear the liquidation loss. That’s why we only accept big market cap cryptocurrencies, like BTC/ETH/SOL, which are safer to integrate into an overcollateralized liquidity pool.
#4. Users should be careful about new tokens and listings. Do you have any other ways to guarantee users’ safety?
Firstly, an isolated liquidity pool avoids relevant risks in response to multiple flash-loan attacks and malicious market manipulations.
Secondly, our dynamic interest rate model manages liquidity to avoid a “Bank Run” when depositors need to withdraw assets from the pool. Hence, the interest rate is determined by the utilization rate of the liquidity pool which changes every 0.4s, made possible by the Solana Blockchain.
Thirdly, and to emphasize secured collateral, assets are supplied to the liquidity pool and additionally selected for collateral to borrow against. Therefore, assets not selected for collateral can never be liquidated. The control is 100% in the users’ hands.
Lastly, that of instant liquidation, Larix also provides an 8% liquidation bonus to liquidators, to facilitate fast liquidation times.
#5. When will your mainnet launch be?
Dimi: – Actually we have launched our Mainnet already. Last week Thursday. Also, our live mining function will be deployed on the 17th which means users will be able to harvest LARIX tokens through lending/borrowing, in addition to APY generating interest.
Questions from Twitter
#1. Typically, investors buy tokens that are likely to increase in price in the future. I saw that the total supply of the token is huge. So, do you have any plan for burning tokens in the future to reduce the supply of the token and increase its investment attractiveness?
Dimi: – The platform token is added to give users an extra value-added utility that will be used for DAO governance. Later, depending on the total circulated supply growth, we consider buying back supply from the open market. The motivation behind such a buyback will stem from the ecosystem expansion within Solana, as you know it has been growing fast. As for a burning mechanism, that will stem from the economics and incentives to balance the token usage and supply. We will start to consider these in later stages, namely 2 and 3.
#2. The NFT market is very hot now, do you think you will apply NFT technology to your products in the future?
Dimi: – In my opinion, Every bull Market brings a surprise of innovation. Digital property is the innovation that allows people, for the first time, to move value across space and time. The future monetary system is going to be nothing like we were used to. Hence, we need to make provisions. And we want to capitalize on this in the future. If a bank can accept a house as collateral to borrow against, then why can’t we accept NFTs as collateral to borrow against.
#3. What prompted you to design the ultimate lending project?
Dimi: – Essentially, the genesis blockchain (Bitcoin) was designed as a way to opt-out for people who understood the value and utility it brings. It proposed a vastly better monetary system, deflationary and self-custodial which can be used by sovereign individuals. Fast forward a decade later, we are only aiming to do what banks have been doing for many decades, that is lend, earn interest, and borrow to facilitate real-world demands, except decentralized. People need financial services. And at the moment the best service is in cryptocurrency and DeFi. And the users are offered ever-increasing choices.
Questions from Telegram
#1. How can I buy tokens from your project? Will you have a program to sell tokens to users in the near future?
Dimi: – Users can generate LARIX tokens in the platform via the mining function. Mining will be deployed on Friday. After IEO, users can buy our token on the exchanges, starting Friday.
#2. Do you have any coin burn/buyback systems or any token burn plans to increase the value of tokens & attract investors to invest?
Dimi: – Yes. We plan to consider the buyback/burn mechanism as we approach phases 2 and 3. Motivation will stem from the growth within the Solana ecosystem and the token supply.
#3. Partnerships are always an important factor for every project. So who is your partner? What are the benefits you get from those relationships?
Dimi: – So far we have partnered with Pyth, as our Oracle, Symmetry, for the index funds (great project), and Plutos of course. Partnerships, you will see, are important as it interlinks the entire ecosystem with each other, making it stronger, better, and giving it more security for longevity and token utility purposes.