Lending

A description of the lending process and involved risks / security considerations.

Due to the pricing dynamics discussed in Pricing & Arbitrage, lenders can be confident that iPTs provide the largest discount and therefore best rate on the market.

Lending (Purchasing iPTs)

In order to "lend", applications purchase iPTs from secondary markets to capture their discount. Once purchased, lenders hold iPTs and wait until maturity for redemption.

Once maturity is reached, lenders can either redeem manually or optionally utilize an automatic redemption process enabled by our implementation of EIP-5095.

This makes lending as simple as purchasing an iPT and... thats it!

Optimized Routing

While iPTs should in nearly all cases provide the largest discount, off-chain applications can optimize further and utilize the Illuminate API (IlluminAPI).

The IlluminAPI provides a granular response as to the optimal rate and if purchasing iPTs directly is suboptimal, Illuminate provides convenience lending methods for the purchase and wrapping of external PTs.

Risks

Like most, Illuminate shares some core risks that come with our integrated DeFi protocols.

These include: - Smart Contract Bugs + Reviewer Oversight - Oracle Liveliness - Liquidator Liveliness

Should any of our external integrations face a shortfall event, iPTs may then become partially collateralized.

This may either reduce yields or lead to negative yields in the case of significant external protocol losses.

Audits

We work to reduce these risks through diligent audits alongside Code4rena and Sherlock (TBD).

For a report of our first audit with code4rena, check out the official report, and our blog post review: Code4rena Audit: Link Code4rena Review:

Sherlock Audit 1: Link Sherlock Audit 2: Link

As a disclaimer, audits should not be considered an advertisement of safety, and are only a single indicator of the safety of a protocol.

Insurance

We also provide insurance through our safety module (Information TBD) and a baseline coverage of up to $10,000,000 through our partnership with Sherlock (TBD).

Bug Bounty

Through our partner Immunefi, we offer up to a $500,000 bug bounty for the report of severe vulnerabilities.

A record of previously public payouts:

https://swivel.substack.com/p/swivilian-report-initial-audit-finding