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PRODUCT_REQUIREMENT_DOC.md

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Product Requirement Document (PRD)

1. Product Overview

Project Name: QuickLend Goal: Create a decentralized, non-custodial liquidity protocol where users can participate as Suppliers (providing liquidity to earn interest) or Borrowers (taking over-collateralized loans).

Core Philosophy

  • Pooled Liquidity: No peer-to-peer matching; users interact with a smart contract pool.
  • Over-collateralization: All loans must be backed by more value than the debt to ensure solvency.
  • Algorithmic Interest: Rates are determined by the ratio of borrowed funds to supplied funds (utilization).

2. Functional Requirements

2.1 Supply & Withdraw

  • Supply: Users deposit supported ERC-20 tokens into the protocol. In return, they receive "qTokens" (ERC-20 Tokens) representing their share of the pool plus accrued interest.
  • Withdraw: Users burn qTokens to reclaim their underlying assets. Withdrawal is only permitted if the user’s remaining collateral is sufficient to cover their active borrows.

2.2 Borrow & Repay

  • Borrow: Users can borrow an asset against their supplied collateral. The maximum amount is governed by the Loan-to-Value (LTV) ratio of the collateral.
  • Repay: Users return the borrowed asset plus accrued interest to close their debt and "unlock" their collateral.

2.3 Cross-Supply/Borrow (Multi-Asset)

  • The protocol must support multiple pools (e.g., ETH, USDC, WBTC).
  • A user should be able to supply Asset A and borrow Asset B.
  • The system calculates the total value of all collateral vs. total value of all debt in a single USD-denominated "Health Factor."

3. Core Mechanics & Mathematical Logic

3.1 Interest Rate Model

Interest rates should be a function of Utilization ():

Utilization = Total_Borrowed / Total_Supplied

As approaches 100%, the interest rate increases sharply to encourage repayments and new deposits.

  • Borrow Rate (): .
Borrow_Rate = Base_Rate + (Utilization * Slope_Value)
  • Supply Rate (): .
Supply_Rate = Borrow_Rate * Utilization * (1 - Reserve_Factor)

3.2 Health Factor ()

The determines if a position is safe or eligible for liquidation.

Health_Factor = (Sum_of(Collateral_i * Liquidation_Threshold_i)) / Total_Debt_in_USD
  • Health Factor > 1.0: The position is healthy.
  • Health Factor < 1.0: The position is under-collateralized and can be liquidated.

3.3 Liquidation

If , a third-party "liquidator" can:

  1. Repay a portion of the borrower's debt (e.g., up to 50%).
  2. Receive an equivalent amount of the borrower's collateral plus a Liquidation Bonus (e.g., 5-10%) as an incentive.

4. Technical Architecture

4.1 Smart Contract Structure

  • Core/LendingPool: The main entry point for user interactions (Supply, Borrow, Repay, Withdraw).
  • Price Oracle: A contract (e.g., Chainlink) to provide real-time price feeds for LTV and calculations.
  • InterestRateModel: A standalone contract that calculates rates based on pool state.
  • qToken: An ERC-20 compliant token representing the user's deposit share.

4.2 Sequence Diagram: The Borrow Flow

  1. User calls supply(asset, amount) -> Pool transfers tokens and mints qTokens.
  2. User calls borrow(asset, amount).
  3. Pool checks Oracle for asset prices.
  4. Pool calculates Health Factor.
  5. If , Pool transfers borrowed tokens to User.

5. Security Requirements

  • Price Manipulation Protection: Use decentralized oracles (Chainlink) rather than spot prices from a single DEX to prevent "Flash Loan" price manipulation attacks.
  • Reentrancy Guard: Apply nonReentrant modifiers to all functions involving asset transfers.
  • Emergency Pause: A "Circuit Breaker" controlled by an admin/DAO to pause deposits and borrows in case of a detected exploit.

6. User Interface (UI) Features

  • Dashboard: Show Total Market Size, Total Borrows, and Net APY.
  • Account View: Display User Health Factor, Max Borrow Power, and "Liquidation Price" for their collateral.
  • Asset List: A table showing Supply APY, Borrow APY, and LTV for each supported token.