Marat Nusurov

Lend & Borrow Protocol

Company: HodlTree
Role: Senior Solidity Developer
Stack: Solidity 0.8.0 · Aave V2 · Chainlink Oracle · Truffle · OpenZeppelin · Web3.js
Period: 09/2020 - 05/2021

Overview

Decentralized lending and borrowing protocol on Polygon and Ethereum enabling users to deposit collateral, earn multi-layer yields through Aave integration, and borrow against their holdings with dynamic risk management. The system uses Chainlink price oracles for accurate asset pricing and implements sophisticated liquidation mechanics to maintain protocol health. Supports multiple collateral types (USDC, DAI) and denominations (wMATIC, wETH) with per-token yield strategies.

Technical Scope

Dual-Contract Architecture

• Lender Contract - Manages deposits and yield accrual: users deposit wrapped assets (wMATIC, wETH) to mint pool tokens proportional to share; earn yield from Aave deposit interest and borrower fees; proportional redemption with no lockup period; ERC20-compliant pool token representing lender share
• Borrower Contract - Manages collateral and debt: users deposit supported collateral (USDC, DAI) to establish borrowing capacity; borrow wMATIC or wETH up to configurable collateral coefficient (default 60%); real-time health factor tracking with liquidation at factor below 1.0; repay debt to withdraw collateral proportionally

Aave Yield Integration

• Deposited collateral automatically lent to Aave V2 for additional yield
• Aave rewards claimed and distributed to protocol owner
• Multi-layer yield: Aave interest + borrower fees accumulated in lender pool
• Supports Aave incentive programs with automated reward claiming

Dynamic Risk Management

• Real-time collateral valuation via Chainlink oracle (8-decimal feeds converted to 18-decimal precision)
• Health factor calculation: (collateral value × collateral coefficient) / debt
• Position becomes liquidatable when health factor drops below 1.0
• Liquidation threshold at 80% collateral coefficient with 20% liquidator bonus incentive

Liquidation Mechanism

• Any user can liquidate undercollateralized positions
• Liquidator repays debt and receives discounted collateral (20% bonus)
• Automatic health factor verification preventing bad liquidations
• Incentive structure maintains protocol solvency while rewarding liquidators

Fee Distribution System

• Off-chain fee calculation via ECDSA-signed messages
• On-chain verification maintains security without expensive computation
• Lenders claim accumulated fees using signed messages
• Admin-controlled fee rate with transparent accrual tracking

Key Engineering Decisions

Decision	Rationale
Dual-contract (Lender/Borrower)	Clear separation of concerns; lenders unaware of borrower risk; independent token economics
Aave collateral deposits	Free yield generation on locked collateral; leverages battle-tested Aave V2 risk management
Chainlink oracle feeds	Decentralized price feeds eliminate single-point-of-failure pricing; 8-decimal standardization reduces implementation risk
ECDSA fee signatures	Off-chain computation reduces gas costs while maintaining on-chain verification; enables batched fee claims
20% liquidation bonus	Aggressive incentive attracts liquidators; maintains protocol solvency during market volatility

Links & Archives

• GitHub: Not public (company policy)
• Contracts Deployed:
  • Ethereum wETH: Lender · Borrower USDC · Borrower DAI
  • Polygon wMATIC: Lender · Borrower USDC · Borrower DAI
  • Polygon wETH: Lender · Borrower USDC · Borrower DAI
• Articles: Medium - 20% for Lenders, 0% for Borrowers? - Local Copy

Technical Insights

• Chainlink decimal inversion in one step. Price feeds return USD values in 8-decimal precision; collateral is 6-decimal USDC, debt is 18-decimal wMATIC. Rather than converting in stages, priceDecimalsPower = 18 + oracle_decimals is computed once at deploy time, and price = 10 ** priceDecimalsPower / rawFeedValue normalizes and inverts in a single expression - no intermediate rounding.

• Yield accounting via aToken delta. User collateral is tracked as totalBalance. The same funds sit in Aave as a rebasing aToken, whose balance grows automatically with interest. The difference aToken.balanceOf(this) − totalBalance is the claimable yield - no separate accrual logic needed.

• Mainnet-fork-first integration tests. The test suite forks Polygon mainnet with real Aave and Chainlink addresses and an unlocked USDC whale account. All external integrations are tested against production state, not mocks - a decision that caught decimal-handling bugs invisible in unit tests.

• Atomic compound operations. depositAndBorrow() and repayAndWithdraw() execute both actions in one transaction, eliminating the window between two separate calls where a price move could leave the position undercollateralized before the second call lands.

See HodlTree page for additional context.