Fringe v3

Pooled Collateral

Fringe's V3 Pooled Collateral enhancement will allow users to pool their various collateral deposits to take out positions against them as a whole.

In the existing platform, any single position (whether a borrow or leveraged trade) could only be opened against a single collateral deposit. However, with the introduction of the pooled collateral enhancement, users will be able to take positions using any listed lending assets against their pool of multiple collateral assets. This flexibility and power of pooled collateral will enable users to leverage various assets, resulting in more diversified and robust portfolios that are less susceptible to single-asset volatility.

To support pooled collateral, we are changing the liquidation mechanism. Previously, each position had an explicit link to a particular collateral asset, and if that asset's value dropped below a certain threshold, the position would be liquidated. However, with pooled collateral, positions will no longer be explicitly linked to any one collateral asset.

Instead, a user's collateral deposits will be pooled, and a liquidator can select which of the user's collateral assets they wish to liquidate. This not only supports the flexibility of pooled collateral but also provides a more efficient and dynamic liquidation process that can quickly adapt to changes in the market. This enhanced liquidation mechanism offers greater security for lenders, providing stronger incentives for lender participation in the platform.

By eliminating the traditional one-to-one link between collateral assets and positions, we aim to break down the barriers and make it possible for smaller investors to participate in DeFi borrowing, and trading, regardless of their experience level or the size of their investments. The system focuses on a user's overall account solvency rather than an individual position's solvency, meaning if one asset's value falls, it won't necessarily trigger a liquidation as the user's other deposited collateral assets can still cover their positions.

UI improvements

The introduction of pooled collateral necessitates updates to the user interface to better reflect these new capabilities. The new UI will streamline the user experience by merging the Lending and Borrowing functions into a unified interface. Additionally, the Amplify leveraged trading facility will be integrated into the Margin Trade facility, creating a single, comprehensive leveraged trading solution. These consolidations will make the platform more intuitive and easier to navigate for users of all experience levels.

Development and testing continue to ensure these improvements deliver an optimal user experience that will support broader adoption of the platform.