FILL Liquidity Pool for Storage Providers

FILL is a liquidity pool, which will be implemented on FVM (Filecoin Virtual Machine) as a fully open-sourced, decentralized, algorithm-based lending platform. FILL facilitates a market for FIL token holders to deposit for passive income, and for SPs to borrow FIL for storage providing.

To distinct from other lending markets, FILL does not require storage providers to collateralize Fiat currencies or other digital assets, instead, the storage providers’ existing account balance and future earnings would be acting as the collateral. Specifically, by taking over the miner’s Beneficiary Address, unlocking rewards from storage mining is pledged by the smart contract before they pay off the loans. It is an innovative use case of the unlocked rewards without compromising the network security.

The borrowing interest rate is not pre-defined or fixed, but dynamically adjusted naturally by the market condition, i.e., supply and demand. Higher demand in borrowing FIL builds up higher utilization rate for the liquidity pool, which pushes up the borrowing interest rate, while higher amount of FIL deposited into the pool reduces the utilization rate and pulls down the borrowing interest rate.

With the design, entry barrier is significantly lowered not only for the SPs to borrow FIL for power growth, but also for FIL token holders to make deposit, regardless the amount of FIL committed. As a bridge between the token holders as lenders, and storage providers as borrowers, FILL is expected be providing unprecedented liquidity in Filecoin market. It would also contribute the Filecoin ecosystem’s overarching goal of incentivizing a global network of computer operators to provide file sharing and storage services by enhancing the liquidity of FIL and further reducing the cost of storage power growth.

The project consists of two smart contracts, FLE and FILL. FLE is designed to be a FRC46 fungible token (currently ERC20) acting as a proof of deposit and earn capital appreciation. Users provide FIL liquidity to receive FLE and redeem FLE to withdraw corresponding FIL. The core functions of the contracts are deposit, redeem, borrow, payback and the pledge/un-pledge of the beneficiary addresses. The contracts will also provide miners’ binding/unbinding functions to enhance security.

The technologies have been applied are hardhat development framework, remix IDE for the smart contract, and react framework for the frontend development. Developers familiarized themselves with the characteristics of the miner beneficiary address by comprehending the FIP-0029 and miner-actor related source codes. Team utilized the libraries provided by Zondax to resolve the difficulties encountered when calling the buildin-actor function in the smart contract. glif/filecoin-address lib effectively streamlined the address conversion process. Since the project is a lending-borrowing contract, interest compounding in Solidity is also one of the difficulties. Team is actively seeking efficient solutions and planning to release the borrowing interest rate model during phase 2.