Revenue Streams

Weft generates income through various activities, with revenue shared among Liquidity Providers (LPs), Liquidators, and the Weft treasury. Each group earns fees based on their specific role within the platform.

Liquidity Providers (LPs)

Liquidity providers, who supply assets to the lending pools, earn income from three main sources:

• Borrowing Fee: LPs receive a portion of the fee that users pay when borrowing assets from the lending pool.
• Interest: LPs earn a share of the interest paid by borrowers on their outstanding loans. The longer the loan remains active, the more interest LPs accrue.
• Flash Loan Fee: LPs are entitled to part of the fee charged for flash loan transactions, which are loans repaid within the same transaction without requiring upfront collateral.

Liquidators

Liquidators help maintain the system’s stability by closing under-collateralized positions. They are compensated through:

• Liquidation Bonus: When a user's CDP (Collateralized Debt Position) is liquidated due to insufficient collateral, liquidators earn a percentage of the liquidated assets as a reward for managing risky positions.

Weft Treasury

The Weft treasury collects revenue from different activities on the platform to ensure the long-term sustainability of the protocol. The treasury's income is essential for covering operational costs, maintaining security, funding future development, and providing resources for governance decisions. Its income streams include:

• CDP Creation Fee: A fixed fee charged whenever a new CDP is created, which is fully allocated to the Weft treasury.
• Share of Borrowing Fee: The Weft treasury receives a portion of the fee charged when users borrow assets.
• Share of Interest: A percentage of the interest paid by borrowers is directed to the Weft treasury.
• Share of Flash Loan Fee: The Weft treasury earns a portion of the fee generated from flash loan transactions.
• Share of Liquidation Bonus: Alongside the liquidator's reward, the Weft treasury also takes a percentage of the liquidation bonus when a CDP is liquidated.

By collecting revenue through these streams, the Weft treasury is able to support the ongoing development and security of the platform, ensuring that the protocol remains stable, well-maintained, and adaptable to future changes.