REAX

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RXLend

Building a Multi-Market Lending Protocol

Project Overview

Transforming vision into reality

Client Information

Organization

REAX

Website

reax.pro

Project Timeline

Start Date

September 2023

Completion

August 2024

Duration

11 months

Project Overview

A comprehensive case study detailing ChainScore Labs' development of RXLend, an innovative lending and borrowing protocol designed to serve both traditional and synthetic assets on Mantle. We engineered a flexible platform with isolated market architecture, allowing users to supply collateral and borrow against both traditional cryptocurrencies and REAX synthetic assets. The protocol features multi-pool lending markets, variable and stable rate options, real-time position monitoring, and advanced risk management systems to ensure platform stability while maximizing capital efficiency.

INTRODUCTION

Enabling Capital Efficiency for Synthetic Assets

The DeFi lending landscape has historically focused on traditional cryptocurrencies, leaving synthetic assets underserved and limiting capital efficiency for users of these innovative financial products. RXLend was conceived to fill this critical gap by creating a lending protocol specifically designed to support both traditional cryptocurrencies and the synthetic assets created through the REAX protocol. This case study details how ChainScore Labs engineered a flexible, secure lending platform that addresses the unique challenges of synthetic asset collateralization while maintaining the familiar borrowing experience DeFi users expect. By implementing isolated lending markets with tailored risk parameters, we've created an ecosystem where users can maximize the utility of their synthetic positions without compromising on security or usability.

MULTI-MARKET-ARCHITECTURE

Multi-Market Lending Architecture

RXLend is built on a specialized multi-market architecture that maintains strict isolation between different asset classes, allowing for optimized risk management while maximizing capital efficiency. This design ensures that volatility or issues in one market don't affect the stability of others.

Isolated Market Design: Engineered separate lending markets for different asset classes, with REAX Lending supporting traditional assets (ETH, BTC, USDT) and Crypto Lending focusing on synthetic assets from the Crypto Synthetic Pool (cETH, cBTC, cUSD).
Market-Specific Parameters: Implemented customized risk parameters for each market, including collateralization ratios, liquidation thresholds, and interest rate models tailored to the specific characteristics of each asset class.
Cross-Market Compatibility: Designed a unified interface that allows users to seamlessly navigate between markets while maintaining clear boundaries in the underlying protocol logic to prevent risk contagion.
Scalable Framework: Created an extensible architecture that can accommodate new lending markets as additional synthetic asset classes are developed, ensuring the protocol can grow alongside the REAX ecosystem.

Isolated Markets

REAX Lending & Crypto Lending

10+

Assets Per Pool

Carefully selected assets

Minimized

Risk Contagion

Through strict isolation

RXLend Multi-Pool Architecture

COLLATERAL-MANAGEMENT

Advanced Collateral Management

At the core of RXLend is a sophisticated collateral management system designed to handle the unique characteristics of both traditional and synthetic assets. This system enables users to supply various assets as collateral while maintaining appropriate risk controls.

Multi-Asset Collateral: Implemented support for a diverse range of collateral assets across markets, with carefully calibrated collateral factors based on liquidity, volatility, and market depth of each asset.
Synthetic Asset Collateralization: Developed specialized logic for synthetic assets that accounts for their unique properties, including oracle dependencies and potential correlation with underlying markets.
Real-time Collateral Valuation: Created a system that continuously updates collateral valuations using oracle price feeds, ensuring accurate assessment of position health and timely liquidation when necessary.
Collateral Efficiency Optimization: Designed mechanisms to maximize capital efficiency by allowing users to supply multiple collateral types against their borrowing positions, with intelligent weighting based on risk profiles.

20+

Collateral Types

Across all markets

Asset-specific

Collateral Factors

Based on risk profile

Real-time

Valuation Updates

Using oracle price feeds

RXLend Collateral Assets Table

BORROWING-MECHANICS

Flexible Borrowing Options

Meeting Diverse User Needs

RXLend offers users flexible borrowing options designed to accommodate different risk preferences and financial strategies. By providing both stable and variable interest rates, the protocol enables users to optimize their borrowing based on market conditions and personal requirements.

Dual Interest Rate Model: Implemented both stable and variable interest rate options for borrowers, with stable rates providing predictable repayment terms and variable rates fluctuating based on market utilization.
Utilization-Based Rates: Designed interest rate models that dynamically adjust based on pool utilization, incentivizing balanced capital deployment with lower rates during low utilization and higher rates as utilization increases.
Synthetic Asset Borrowing: Created specialized borrowing mechanisms for synthetic assets, enabling users to gain exposure to these instruments without directly minting them through the core REAX protocol.
Leverage Optimization: Implemented tools that help users optimize their borrowing to achieve desired leverage levels, with clear visibility into position health and liquidation thresholds.
Borrowing Limits: Established asset-specific and user-specific borrowing limits based on the value and risk profile of supplied collateral, ensuring protocol solvency while maximizing capital efficiency.

Available Assets for Borrowing

Stable & Variable

Interest Rate Types

User-selectable options

25+

Borrowable Assets

Traditional & synthetic

Up to 80%

Max LTV Ratio

Asset-dependent

RISK-MANAGEMENT

Comprehensive Risk Management

RXLend incorporates a multi-faceted risk management framework designed to protect both users and the protocol from market volatility, oracle failures, and other potential risks. This system ensures the long-term stability and reliability of the lending platform.

Dynamic Liquidation Thresholds: Implemented asset-specific liquidation thresholds that trigger position liquidation when health factors fall below required levels, with parameters carefully calibrated based on asset volatility and market depth.
Liquidation Incentives: Designed an incentive system that encourages efficient liquidation of underwater positions by external liquidators, with bonus rewards scaled according to position size and market conditions.
Oracle Risk Mitigation: Integrated multiple oracle providers with fallback mechanisms and validity checks to ensure reliable price data, with circuit breakers that pause borrowing during extreme market conditions or oracle failures.
Health Factor Monitoring: Created intuitive health factor visualization tools that help users track their position status in real-time, with early warning notifications as positions approach liquidation thresholds.
Emergency Shutdown Mechanism: Implemented a tiered emergency response system that can selectively pause protocol functions or trigger an orderly shutdown in extreme scenarios, protecting user funds and ensuring fair resolution.

Asset-specific

Liquidation Threshold

Typically 80-90% of LTV

5-15%

Liquidation Bonus

Based on asset liquidity

1.1 and below

Health Factor Alert

Warning threshold

Position Health Monitoring Interface

INTEGRATION-WITH-REAX

Seamless Integration

RXLend is designed to work in perfect harmony with any assets, creating a unified ecosystem that maximizes value for users of both platforms. The integration enables new use cases and enhanced capital efficiency for synthetic assets.

Synthetic Asset Support: Developed specialized lending markets for REAX synthetic assets, enabling users to leverage their synthetic positions without unwinding them or converting to traditional assets.
Cross-Protocol Strategies: Enabled powerful cross-protocol strategies where users can borrow assets on RXLend to mint synthetics on REAX, or use synthetic assets as collateral to borrow traditional cryptocurrencies.
Unified User Experience: Created a seamless user experience with consistent design language, shared authentication, and intuitive navigation between REAX and RXLend functionality.
Complementary Tokenomics: Designed complementary incentive structures that reward users participating in both protocols, creating positive feedback loops that enhance liquidity and utilization across the ecosystem.

All REAX assets

Integrated Synthetics

Full ecosystem support

Seamless

Cross-Protocol UX

Single interface for both

10+

Combined Strategies

Novel DeFi workflows

USER-EXPERIENCE

Intuitive User Experience

Simplifying Complex Lending Mechanics

RXLend features a thoughtfully designed user interface that simplifies complex lending operations, making DeFi borrowing accessible to users with varying levels of experience. The interface provides clear information on all relevant parameters while guiding users through each step of the lending and borrowing process.

Step-by-Step Workflow: Designed an intuitive step-by-step workflow that guides users through the lending and borrowing process, from selecting a market to monitoring positions, with contextual help at each stage.
Real-Time Position Monitoring: Implemented comprehensive dashboards with real-time updates on collateral value, borrowed amounts, health factors, and interest accrual, giving users full visibility into their positions.
Risk Visualization: Created visual indicators that clearly communicate position risk, liquidation thresholds, and optimal borrowing levels, helping users make informed decisions and avoid liquidation.
Educational Resources: Integrated contextual tutorials, tooltips, and documentation throughout the interface, educating users about lending concepts and best practices while they interact with the protocol.
Mobile Optimization: Developed a fully responsive interface that works seamlessly across devices, allowing users to manage their lending positions on desktop or mobile with equal effectiveness.

User Flow Steps

From market selection to monitoring

10+

Position Metrics

Real-time monitoring indicators

Extensive

Educational Components

Integrated throughout the UI

Security Architecture

Protecting User Assets and Protocol Stability

Formal Verification: Applied formal verification methods to critical protocol components, mathematically proving the correctness of key functions like liquidation logic and interest accrual.
Tiered Access Control: Implemented granular access control systems with time-locks and multi-signature requirements for sensitive administrative functions, preventing unauthorized parameter changes.
Economic Attack Mitigation: Designed the protocol to resist various economic attack vectors, including flash loans, oracle manipulation, and governance attacks, through carefully calibrated economic parameters.
Fail-Safe Mechanisms: Created circuit breakers and emergency pause functions that can halt specific protocol operations during detected anomalies, preventing cascading failures or exploitation.
Independent Security Audits: Conducted multiple rounds of security audits with leading blockchain security firms, addressing all identified issues and implementing suggested enhancements.
Incremental Deployment: Followed a conservative deployment strategy with initial asset listings limited to well-established cryptocurrencies, gradually expanding to more assets as the protocol demonstrated stability.
Continuous Monitoring: Implemented comprehensive on-chain and off-chain monitoring systems that track key protocol metrics and alert the team to potential issues before they can impact users.
Bug Bounty Program: Established an ongoing bug bounty program with significant rewards for identifying security vulnerabilities, incentivizing responsible disclosure from the security research community.