Hi again, this is Anyfty team ❤️. For those who are not yet familiar with the project, please read our previous article about Anyfty basics where we’ve covered all fundamental principles of the protocol.
As promised, today we are going to talk about roles of the protocol participants such as Borrowers, Liquidity Providers, Stability Providers and Liquidators.
How does Anyfty works?
To understand the roles of the protocol participants, firstly we should describe how protocol works by itself. Anyfty is a decentralised P2Pool NFT liquidity protocol which consists of two main parts:
- Indexing of NFTs, or as we call it wrapping NFTs into synthetic fungible tokens.
- Using synthetic fungible tokens for getting instant access to united liquidity instruments, such as borrowing, swapping, trading or holding.
Let’s focus more on these two main parts of the protocol. Before indexing, NFT is firstly categorised for a specific Index and evaluated by Anyfty Artificial Intelligence (AI). This process is automatic however it is backed by DAO to insure security and execute possible deviations.
After that, when the NFT is pooled to Index, the user gets a synthetic fungible tokens instead. In all docs we call such tokens $NFT_01. It can also be $NFT_02 depending on the index, but let’s use $NFT_01 for a simple clarity. After indexing, the user gets access to the liquidity instruments: borrowing, swapping, trading or holding. Despite the four liquidity functions mentioned, borrowing is the most important one, as it is the main feature of Anyfty. Other three are also important, but they should be clear for everyone. If not, please feel free to drop us a message.
Anyfty participants
As we’ve covered some main Anyfty mechanics, now we will describe protocol participants such as Borrowers, Liquidity Providers, Stability Providers and Liquidators. Those participants are important for the protocol as they make the protocol to work properly.
- Liquidity Providers
As mentioned already, one of the most important features of the protocol is an ability for potential borrowers to obtain instant loans against the collaterals. To provide that, Anyfty is designed as the P2Pool protocol where loans are issued by the Pool, not personalities. So, in a few words, the liquidity providers deposit their funds in FUSD to the protocol and gain yield while the protocol uses this money for issuing loans. - Borrowers
Borrowers are those users who wrap their NFTs into synthetic fungible tokens and use such tokens to receive prompt loans in FUSD collateralized by the NFTs within the Anyfty protocol. They get funds from the protocol backed by the liquidity providers impersonal. - Liquidators
The Liquidators are users or bots who participate in a liquidation process that occurs when the Borrower’s value of collateralised assets does not sufficiently cover the cost of the loan. It happens when NFT’s price drops continuously and the borrower is not coming back. In a great world a responsible borrower should pay back the loan when price drops, but in the real world it will not happen sometimes. That is why the liquidators are important, they will buy a collateral with discount and pay it cost to the protocol. Anyfty designed to liquidate collaterals before assets will not sufficiently cover the cost of the loan. - Stability providers
As we know already, the liquidators buy unwanted collaterals from the protocol and repay the borrower’s loan. But what will happen, if the price of collateral will drop dramatically or a huge demand on unexpected withdrawal will appear? In order the protocol to be additionally secured from any default risks connected with volatility of collaterals, external attacks or any other circumstances which might influence its stability, Anyfty is designed to be backed by the Stability Providers. Stability Providers stake ANFT tokens to the Stability Pool pool and receive Stability Incentives instead. Staking of Anyfty tokens has a freeze period to ensure they stay in a protocol when needed.
Conclusion
In this article we had a helicopter view on some key roles of Anyfty participants and this leads us to a very obvious question — how Anyfty will price collaterals and know the exact time to start a liquidation event? We will discuss topics such as initial and real-time price valuation of NFTs and scenarios for the liquidation of collaterals in the following article.
You can always read our full existing technical documentation at docs.anyfty.io, or ask any questions using Telegram https://t.me/anyfty_discussions ❤️
