Clynto Protocol White-paper

Background

Traditional financial systems rely on centralized entities to facilitate lending and borrowing activities, often leading to inefficiencies, high costs, and lack of transparency. The emergence of blockchain technology and decentralized finance (DeFi) has introduced new opportunities to create more efficient and transparent financial systems.

Vision

Clynto aims to create a fair, transparent, and efficient P2P lending and borrowing ecosystem by leveraging blockchain technology and community governance. By allowing users to use their crypto and NFT assets as collateral, Clynto provides a seamless and secure way to access liquidity and secure investments.

Problem Statement

Market Inefficiencies

Traditional financial systems suffer from several inefficiencies, including high transaction costs, lack of transparency, and limited access to financial services. These inefficiencies often result in reduced purchasing power and increased risk for asset holders.

Centralization Risks

Centralized financial systems are prone to single points of failure and can be subject to regulatory and operational risks. The reliance on intermediaries often leads to delays, increased costs, and reduced trust among participants.

Solution

Clynto Protocol

Clynto addresses these challenges by providing a decentralized platform for P2P lending and borrowing. The protocol leverages blockchain technology to ensure transparency, security, and efficiency in financial transactions.

Key Features

• Multi-Chain Support: Operates on multiple blockchain networks, including Solana and Ethereum (Base).
• Diverse Collateral Options: Users can collateralize various crypto assets and NFTs for stable-coin loans.
• Community-Driven APR: Interest rates and liquidation thresholds are determined through community governance.
• Clynto Token (CLY): Integral to the ecosystem, facilitating staking, governance, and more.
• Nectar Rewards System: Users earn points for activities, redeemable for fee reductions and premium features.

Architecture

Overview

The Clynto protocol is built on a modular architecture, allowing seamless integration with multiple blockchain networks. The core components include smart contracts for loan agreements, collateral management, and governance.

Smart Contracts

1. Loan Agreement Contract:
   • Manages loan terms, including collateral value, loan amount, interest rate, and repayment schedule.
   • Automates the execution of loan agreements and ensures compliance with predefined terms.
2. Collateral Management Contract:
   • Handles the locking and release of collateral assets.
   • Ensures collateral value is maintained and adjusts LTV ratios based on market conditions.
3. Governance Contract:
   • Facilitates community voting on key protocol parameters.
   • Implements changes based on governance decisions, such as interest rate adjustments and liquidation thresholds.

Interoperability

Clynto's smart contracts are written in Solidity, enabling compatibility with multiple blockchain networks. The protocol utilizes cross-chain bridges to facilitate asset transfers and ensure seamless operation across different networks.

Governance

Token-Based Governance

Clynto employs a token-based governance system, where CLY token holders can participate in decision-making processes. This includes voting on proposals, setting interest rates, and defining liquidation thresholds.

Incentive Voting

To encourage active participation, Clynto introduces an incentive voting system using Nectar points. Users earn Nectar points for engaging in governance activities, which can be redeemed for various benefits, such as fee reductions and premium features.

Voting Processes

1. Feature Requests:
   • Eligibility: Any CLY token holder with staked CLYs can submit a feature request proposal.
   • Process: Proposals are submitted, reviewed, and voted on by the community.
2. Interest Rate and LTV Governance:
   • Eligibility: Any CLY token holder can participate, no staking required.
   • Process: Weekly voting on low, mid, and high-risk LTV tiers and their maximum allowed interest rates.
   • Outcome: Determines the interest rates and LTV ratios for the protocol.

Use Cases

Borrowers

• Access to Liquidity: Borrowers can use their crypto and NFT assets as collateral to obtain stable-coin loans without selling their assets.
• Flexible Terms: Borrowers can choose from various loan terms and interest rates based on their LTV ratios and collateral value.

Lenders

• Investment Opportunities: Lenders can invest in borrower pools and earn interest based on their contributions and the risk levels of the loans.
• Transparent Returns: Lenders receive real-time updates on their investments and can track their earnings through the platform.

Security

Smart Contract Audits

Clynto conducts regular audits of its smart contracts to ensure security and functionality. Independent third-party auditors review the code to identify and mitigate potential vulnerabilities.

Dispute Resolution

A robust dispute resolution mechanism is in place to address conflicts and grievances related to governance decisions and loan agreements. This ensures transparency and fairness in resolving disputes.

Backup and Recovery

Clynto implements robust backup and recovery procedures for governance data and smart contracts. Redundancy and availability of governance infrastructure are ensured to maintain the integrity of the platform.

Roadmap

Phase 1: Development and Testing

• Develop core smart contracts for loan agreements, collateral management, and governance.
• Conduct internal and third-party audits of smart contracts.
• Launch a testnet version of the protocol for community testing and feedback.

Phase 2: Mainnet Launch

• Deploy the Clynto protocol on Solana and Ethereum (Base) networks.
• Launch the Clynto token (CLY) and initiate governance processes.
• Introduce the Nectar rewards system and incentivize early adopters.

Phase 3: Expansion and Integration

• Expand multi-chain support to additional blockchain networks.
• Integrate with DeFi platforms and liquidity providers to enhance ecosystem functionality.
• Continuously improve the protocol based on community feedback and governance decisions.

Daily Interest Calculation

Overview

This guide provides a detailed explanation of how to calculate daily interest on the protocol for each lender in a given borrower pool. The goal is to determine the total amount owed and the total interest accrued over time.

Example with interest overtime breakdown

Definitions

1. Annual Percentage Rate (APR): The yearly interest rate expressed as a percentage.
2. Daily Rate: The daily interest rate calculated from the APR.
3. Investment Amount: The amount of money each lender contributes to the loan.
4. Total Loan Amount: The sum of the initial loan amount and the accrued interest over time.
5. Total Amount Owed to Date: Sum of the initial loan amount and all accrued daily interest.
6. Total Interest Accrued to Date: Sum of daily interests accrued over the period.
7. Liquidation Point: Governance-driven % that represents the maximum allowed LTV at any given point
8. Investment APR: Investment Amount / Requested Amount * Max Tier Interest Rate

1. Loan-to-Value (LTV) Ratio: The ratio of the loan amount to the collateral value.

Formulas

1. Convert APR to Daily Rate: Daily Rate=365APR

   $\text {Daily Rate} = \frac{\text{APR}}{365}$

2. Calculate Daily Interest: Daily Interest = Investment Amount × Daily Rate

   $\text {Daily Interest}= \text {Investment Amount} × \text {Daily Rate}$

3. Accumulate Daily Interest:Total Daily Interest=∑(Daily Interest for each Lender)

   $\text{Total Daily Interest}=∑ (\text{Daily Interest for each Lender})$

4. Update Total Loan

   $\text {New Total Loan Amount}=\text {Previous Loan Amount}+ \text {Total Daily Interest}$

5. Recalculate LTV

   $\text{LTV} = \left( \frac{\text{Total Loan Amount}}{\text{Collateral Value}} \right) \times 100$

Example Calculations

Initial Loan Details

• Collateral Value: $10,000
• Requested Amount: $5,000
• Initial LTV: 50%
• Total Pool APR: 70%

Lender Contributions and APRs

• Lender X:
  • Investment Amount: $2,000
  • APR: 28% (Max → )
  • Daily Rate: $\frac {28}{365} \approx 0.0767$
  • Daily Interest: \text {2000×0.000767}≈\1.5342000$
• Lender Y:
  • Investment Amount: $1,500
  • APR: 21%
  • Daily Rate: $\frac {21}{365} \approx 0.0575$
  • Daily Interest: \text {1500×0.000575}≈\0.8625$
• Lender Z:
  • Investment Amount: $1,500
  • APR: 21%
  • Daily Rate: $\frac {21}{365} \approx 0.0575$
  • Daily Interest: \text {1500×0.000575}≈\0.8625$

  Total Daily Interest

  \text{Total Daily Interest} = \1.534 + $0.8625 + $0.8625 = $3.259$

  Daily Calculation Process

  1. Day 1:
     • Previous Loan Amount: $5,000
     • Total Daily Interest: $3.259
     • New Total Loan Amount: $5,000 +$3.259 = $5,003.26
     • New LTV: $\left( \frac{5003.26}{10000} \right) \times 100 \approx 50.03\%$
  2. Day 2:
     • Previous Loan Amount: $5,003.26
     • Total Daily Interest: $3.259
     • New Total Loan Amount: $5,003.26 +$3.259 = $5,006.52
     • New LTV: $\left( \frac{5006.52}{10000} \right) \times 100 \approx 50.07\%$
  3. Continue Daily Calculation:
     • Adding the total daily interest to the previous loan amount and recalculating the LTV until it reaches 100% (Or liquidation point defined by the Governance)

Conclusion

Clynto aims to revolutionize the DeFi landscape by providing a transparent, secure, and efficient platform for P2P lending and borrowing. By leveraging community governance and innovative features, Clynto empowers users to unlock liquidity and secure investments using their crypto and NFT assets. Join us in building the future of decentralized finance.

Appendix

Glossary

• APR (Annual Percentage Rate): The yearly interest rate expressed as a percentage.
• LTV (Loan-to-Value) Ratio: The ratio of the loan amount to the collateral value.
• Smart Contracts: Self-executing contracts with the terms of the agreement directly written into code.
• DeFi (Decentralized Finance): A financial system built on blockchain technology that operates without intermediaries.
• NFT (Non-Fungible Token): A unique digital asset representing ownership of a specific item or piece of content.
• CLY Token: The native governance token of the Clynto protocol.
• Nectar Points: Rewards earned by users for participating in governance activities.

References

• Ethereum Documentation
• Solana Documentation

Contact Information

For more information, visit our website at www.clynto.io or contact us at info@clynto.io.