Initial Requirements
The initial requirements defined by the blueprint team
1. Introduction
This document outlines the requirements for the design and functionality of the Loan To Value (LTV) Monitor system. The system is designed to oversee the health of loans in concrete (DeFi) applications by categorizing them based on their LTV ratios and facilitating necessary actions through blockchain interaction.
2. System Overview
The LTV Monitor system comprises the LTV Monitor, a Database (DB) that replicates the smart contract state, and interfaces with both the blockchain and the borrower service.
3. Components
3.1 LTV Monitor
Responsibilities:
Continuous Monitoring: Regularly assess the health of loans.
Loan Categorization: Classify loans into buckets based on LTV ratios.
Status Updates and Interactions: Communicate with borrower services for updating loan statuses on the blockchain.
Monitoring Process:
Regular checks of the LTV ratio against predefined thresholds (LTV1 and LTV2).
Loan Categorization:
Healthy
LTV1 Breached
LTV2 Breached
Liquidated
Cron Jobs:
Separate cron jobs for each bucket for timely processing.
3.2 Database Mimicking Smart Contract State
Purpose:
Acts as a local representation of the blockchain's smart contract state for loan information.
Structure:
Stores essential loan data, including LTV ratios and current status.
Benefits:
Reduces load on the blockchain and improves system performance.
4. Buckets and Health Monitoring
Health Bucket: Loans within healthy LTV ratios.
LTV1 Breached Bucket: Loans exceeding LTV1 threshold.
LTV2 Breached Bucket: Loans beyond LTV2 but not yet liquidated.
Liquidation Bucket: Loans requiring immediate action.
5. Interaction with Blockchain
Blockchain Executions: Initiates updates like loan status changes.
State Updates: Ensures the blockchain accurately reflects each loan's state.
Borrower Service Integration: Manages loan updates in collaboration with borrower services.
6. Cron Job Timing Intervals
Optimization for Scalability: Configurable intervals based on system load and performance.
7. Security Measures
Access Controls: Restricted access to authorized personnel.
Data Encryption: Encrypts sensitive data and blockchain interactions.
8. Scalability and Extensibility
Adapting to Growing Loans: Efficiently handles increasing loan volumes.
Flexibility for New Buckets: Allows addition of new buckets as needed.
9. Use Case in Concrete Application
Scenario: Managing LTV Ratios in a Concrete Platform
Background:
Platform: A Concrete decentralized finance platform offering a protection on crypto-backed loans.
Requirement: Monitoring the health of loans based on fluctuating cryptocurrency values.
Process:
Loan Origination: Users obtain protection backed by crypto assets.
LTV Monitoring: The LTV Monitor continuously assesses each loan's LTV ratio.
Threshold Breach Actions: If the LTV exceeds certain thresholds, the monitor categorizes the loan for appropriate action (e.g., liquidation, issue a credit line).
Blockchain Interaction: The system updates the loan status on the blockchain and communicates with borrower services.
Cron Jobs: Regularly scheduled jobs process loans in each category, ensuring timely actions.
Outcome:
Risk Mitigation: Reduces the platform's risk by actively managing LTV ratios.
User Transparency: Provides borrowers with real-time updates on their loan status.
Efficiency: Ensures smooth operation even as the number of loans scales up.
10. Conclusion
The LTV Monitor system is crucial for maintaining loan health, adhering to LTV thresholds, and enabling efficient interactions with blockchain and borrower services in DeFi applications. Its categorization of loans into distinct buckets, combined with automated cron jobs, ensures effective loan status management, supporting scalability and enhancing the DeFi lending process.
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