Users

Users can participate in BACK as yield farmers, lenders and liquidators.

user

Yield farmer

Yield farmers can earn high returns from taking on leveraged yield farming positions. Of course, higher returns bring higher risks including liquidation risk, short-term loss and etc.

Leveraged mining: Once users select a pool, they can farm by supplying two assets at any ratio to the pool and specifying the desired crypto to borrow and the leverage to farm. A quick example: the user provides ETH/USDT at any ratio to ETH/USDT pool and chooses USDT as the crypto to borrow. Then BACK will automatically and optimally swap the tokens in Mdex or other platforms to ensure that the ratio of the tokens participating in yield farming is the same as that of the pool.

Auto staking: BACK will automatically stake LP token to get MDX and other platform tokens.

Reinvestment welcomed: BACK encourages users to reinvest MDX and other farmed tokens to further increase token rewards.

High debt ratio: Liquidation takes place when debt ratio (debt/position value) exceeds liquidation debt ratio.

To avoid any liquidation loss, please refill your position once its health mark is in the red zone.

Adjustable positions：users can at any time add more tokens.

Currently, only when users withdraw assets can they have their principals back.

The following is an example scenario for yield farmer Allen:

1. Allen has 100 USDT and wants to farm MDX on Mdex’s HUSD/USDT pool, where he can normally earn 17% APY. Under normal circumstances, he can swap roughly half USDT to HUSD and supply them to the pool to earn 17% APY.

2. Now with BACK, he can borrow 150 USDT from BACK’s deposit pool. Together with the initial 100 USDT, now he can farm with 250 USDT (2.5x leverage!) and earn a total yield of 42.5% APY, twice the amount of his original annual yield.

3. With no further deposit, Allen can continue farming as long as his position value does not drop below 187.5 USDT. The farmed MDX can be reinvested or put into his wallet.

4. When the debt ratio of Allen’s position is approaching 187.5 USDT, Allen can either add position or repay some debt to avoid being liquidated.

5. If Allen wants to stop farming or get some funds back, he can choose to withdraw funds. BACK will convert the underlying funds to the currency that Allen borrows to pay back his loan and return the rest back to Allen based on the rule of minimum trading slippage.

Note: Allen needs to pay the borrowing interest on the borrowed amount, which depends on the USDT utilization rate.

Users who lend and borrow cryptos in BACK will be rewarded with BACK tokens.

Lenders

Lenders earn returns by depositing their funds into BACK’s deposit pool. The deposited funds will be provided to yield farmers to increase their positions.

Interest-bearing token (bk Token): When users deposit ETH/USDT/HUSD to BACK deposit pool, they receive a proportional amount of bk Token, a tradable and interest-bearing asset that represents their shares in the deposit pool.

Earn Interest: Interest paid by borrowers are distributed to lenders, proportionate to the amount lent. Lenders' interest rate depends on fund utilization rate; the higher the utilization, the higher the interest rate.

Notes:Borrower's interest rate model follows slope curve

Users who deposit cryptos in BACK will be rewarded with BACK tokens.

Liquidators

Liquidators closely monitor the debt ratio of the positions in the liquidity pool. Liquidation takes place when excessive debt ratio is spotted and liquidators can earn bonuses for liquidating positions at risk.

Liquidation bonus: liquidators earn bonuses for liquidating positions at risk.

The following is an example scenario for liquidator David and overview of the liquidation process:

1. Mary leverages 2x by borrowing 200 ETH with her initial 100 ETH to farm Mdex on ETH/USDT Mdex pool. Mary’s total asset value is 300 EHT (3.5 shares of LP).

2. There’s a significant increase in ETH several days later. Mary’s total position value drops from 300 ETH to 240 ETH. Now her debt ratio stands at 83.33% (200ETH / 240ETH), higher than ETH/USDT liquidation debt ratio (80%). In this case, liquidator can come in to liquidate (the liquidation bonus is 8% of the position value in ETH/USDT pool).

3. David notices the situation and he buys Mary’s position (3.5 shares of LP) at a discount of 10%, that is, 2 ETH (240ETH*0.90). The funds put in by David is to pay debt first (in this case 200ETH) and then he pays Mary the remaining 16 ETH (216ETH - 200ETH).

4. David receives Mary’s LP shares (3.5). In this case, the liquidator earns 10% of the liquidated asset.

The liquidated LP shares are at the disposal of the liquidator.