Loan Health Monitoring System

Overview

The Loan Health Monitoring System is designed to provide comprehensive insights into the status and health of active loans within the Clynto ecosystem. This system will be a critical tool for both borrowers and lenders, offering transparency and timely information to help manage risks associated with DeFi lending and borrowing activities.

Objectives

1. Provide real-time tracking of Loan-to-Value (LTV) ratios.
2. Monitor the effects of accruing interest on loan health.
3. Track changes in collateral market value.
4. Monitor collateral volatility over time.
5. Categorize loan status as:
   1. Green: Healthy and doesn’t qualify for instant liquidation
   2. Yellow: Unhealthy and doesn’t qualify for instant liquidation
   3. Red: Unhealthy and qualifies for instant liquidation
6. Enhance user education and engagement through detailed loan health insights.

Benefits

1. For Borrowers: (CTA: Supply Collateral)
   1. Gain clear insights into the health of their loans.
   2. Receive timely alerts on critical LTV changes and interest accrual.
   3. Understand the impact of market volatility on their loan status.
   4. Track their repayment progress and plan future payments effectively.
2. For Lenders: (CTA: Initiate early liquidation or instant liquidation)
   1. Monitor the health of the loans they have funded.
   2. Assess the risk associated with each loan based on LTV and market conditions.
   3. Stay informed about interest accrual and repayment status.
   4. Make informed decisions about future lending activities.

System Architecture

Components

1. Smart Contracts:
   1. Loan Health Contract: Manages and tracks loan health metrics.
   2. Event Listener Contracts: Monitors on-chain events related to loans and collaterals.
2. Backend Services:
   1. Data Aggregation Service: Collects and aggregates data on loan health metrics.
   2. Analytics Service: Analyzes data to provide insights on loan health.
   3. Notification Service: Alerts users about significant changes in loan health metrics.
3. Frontend:
   1. User Dashboard: Displays detailed loan health metrics and insights.
   2. Alert System: Notifies users of critical loan health changes.

Features and Functionalities

Key Features

1. Active Loan LTV Monitoring:
   1. Track the Loan-to-Value (LTV) ratio of each active loan.
   2. Provide alerts when the LTV approaches critical thresholds relative to the liquidation point.
2. Interest Accrual Tracking:
   1. Monitor interest accrued from each lender over time.
   2. Display total interest accrued to date for each loan.
3. Market Volatility Analysis:
   1. Assess the impact of market volatility on the LTV ratio.
   2. Provide projections and risk assessments based on market trends.
4. Payment Tracking:
   1. Record and display any payments made by the borrower to lenders.
   2. Show the remaining balance and the schedule of upcoming payments.
5. Borrower Transaction History:
   1. Analyze the borrower’s history of DeFi transactions on Clynto.
   2. Integrate data analysis of the borrower’s entire wallet transactions from the blockchain for a comprehensive risk profile.

Outcome

Develop an aggregate scoring system

Conclusion

The Loan Health Monitoring System is an essential addition to the Clynto ecosystem, providing borrowers and lenders with critical insights into loan health. By tracking LTV ratios, collateral value changes, and volatility, the system helps users manage risks effectively. The integration of real-time alerts and comprehensive dashboards ensures users are well-informed and can take proactive measures to maintain healthy loan conditions. This system not only enhances user engagement but also contributes to the overall stability and growth of the Clynto platform.