Key Components
Cyclic Protocol consists of several core components, each of which plays a vital role in the lending process:
Collateralized Lending Users can pledge their locked LP tokens or other crypto assets in exchange for available funds. Smart contracts calculate the user's loan amount based on the type of collateral and market liquidity.
Smart Contract Lending Pool The lending pool is the core of Cyclic Protocol, and all lending operations are controlled by smart contracts. The lending pool automatically evaluates market conditions, collateral value, and ensures that all transactions meet the protocol's risk management standards.
Liquidation Mechanism To ensure the healthy operation of the lending pool, the protocol has a built-in automatic liquidation mechanism. If the user fails to repay the loan on time and the asset value is below the safety threshold, the system will trigger liquidation and sell some or all of the collateral assets to repay the debt.
CYC Governance Token Cyclic Protocol implements community governance through CYC tokens, and token holders can participate in protocol governance, such as adjusting lending rules, setting liquidation thresholds, and changing handling fees.
Repayment and Collateral Return Users can repay their loans at any time and get back their collateral assets after all outstanding debts are paid off. Smart contracts ensure the automatic return of assets and record all transactions to ensure transparency and security.
Nested Economic Model The economic model of the lending protocol is deeply embedded in the operation of Cyclic Protocol. Every inflow and outflow of funds will generate feedback on the economic system of the protocol. In this way, Cyclic Protocol can ensure long-term sustainable development and provide stable returns for users and token holders.
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