Skip to content

Revenue and Insurance module

Revenue plays a pivotal role within the framework of the Weft dApp's operations. It operates as a fundamental mechanism to sustain the platform's day-to-day functioning. Importantly, the revenue generated within the Weft ecosystem serves a dual purpose. It acts as an incentive for the establishment of an insurance module, strategically designed to shield the platform from the intrinsic risks intertwined with market volatility.

The Revenue Model

The Weft revenue model is structured around three distinct streams of fee collection, each designed to generate revenue by sharing a portion of specific financial elements within the platform's ecosystem. These fee streams serve as a mechanism for sustaining the dApp's operations, incentivizing participants to secure pooled liquidity, and ensuring the viability of the lending and borrowing processes facilitated by the platform. The three components contributing to fee collection are as follows:

Accrued Loan Interest

One of the fee streams within the Weft dApp revolves around the interest generated from loans provided by asset lenders. When users lend their assets on the platform, they essentially make their funds available to borrowers in exchange for an interest rate. This interest serves as compensation for the lenders' willingness to lend out their assets, and a portion of it is collected as a fee by the Weft dApp.

Flash Loan Fees

The second fee collection stream involves the collection of flash loan fees from each lending pool on the Weft dApp. As mentioned above, Lending Pools provide the ability to take flash loans, and Weft charges a fee for facilitating these flash loans.

Liquidation Bonus

The Weft dApp offers a liquidation bonus that incentivizes users to participate in the platform's liquidation activities, as they stand to benefit from the successful recovery of defaulted loans. Similar to the loan interest, a share of the liquidation bonus is collected as a fee by Weft.

All revenue collected will be shared by the Weft dApp and WEFT token stakers. The Weft dApp will retain a portion of the collected revenue to cover its operational costs, while the remaining share will be distributed to WEFT token stakers through the Insurance Module.

Insurance Module

As stated previously, the WEFT token serves as a last line of defense against the inherent risks linked with market volatility. In practice, token holders can choose to stake their WEFT tokens in an Insurance Module, significantly reducing the risk of insolvency during turbulent market phases or unforeseen events that could pose substantial threats to Weft's lending pools. Should insolvency become a concern, the stacked WEFT tokens will be strategically sold to cover potential losses.

As mentioned earlier, a share of the collected revenue from day-to-day operations will serve as insurance premiums. This share will be converted to WEFT tokens and deposited as a reward in the Insurance Module staking pool. This approach aligns the interests of participants with the long-term sustainability and prosperity of the Weft ecosystem.

Released under the MIT License.