NillaConnect acts as a proxy between web3 money markets

Throughout this documentation, you will come across mentions of lending pools several times. It is important to understand that these refer to various protocols that NillaConnect can connect and build on top of, which includes but are not limited to Compound or Aave.

NillaConnect acts as a proxy between the user and the underlying lending pool. Once suppliers provide their assets to NillaConnect, the protocol will deposit them into the underlying pool and stack the received interest-bearing tokens (ibToken) as interest.


Supplying Liquidity

  1. Suppliers deposit their funds to NillaConnect

  2. NillaConnect will deposit it to the underlying pool IF the order does not match immediately.

  3. NillaConnect stacks the received Interest-bearing token (ibToken), eg. aToken.

The stacked ibToken of the supplier will be utilized by the protocol to extract liquidity from the pool and transfer it directly to the borrower. This process is referred to as a match, and it enables users to be matched peer-to-peer.

Borrower enters the protocol

Depositing collateral - A borrower then enters to borrow some funds to open an N-Position.

  1. Borrower uses the collateral to take out some funds for leverage

  2. Triggering the matching engine, NillaConnect returns the ibTokens to redeem suppliers' funds out of the underlying pool

  3. The funds are redeemed from the underlying pool

  4. NillaConnect provides the funds to the borrower for their N-Positions

Both parties will then benefit from better rates with NillaConnect's P2P APY.

Withdrawing collateral - When collateral is withdrawn, the deposit process is reversed. NillaConnect unstakes the ibToken and transfers the token originally provided as collateral back to the user. Note that the borrower will be able to withdraw exactly as many collateral tokens as they provided, independent of the ibToken earning interest.

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