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A description of the lending process and involved risks / security considerations.
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.
This makes lending as simple as purchasing an iPT and... thats it!
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.
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.
We work to reduce these risks through diligent audits alongside Code4rena and Sherlock (TBD).
As a disclaimer, audits should not be considered an advertisement of safety, and are only a single indicator of the safety of a protocol.
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).
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: