SCF #12
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A flash loans protocol with its own liquidity management on Soroban.

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Our goal is to finish building in ~3 months the working prototype of a decentralized ecosystem to borrow money through flash loans and to generate healthy yield by lending.

As the term "ecosystem" hints, we envision XycLoans not only as a protocol but as a protocol + other components, making it effectively an ecosystem.

There are 4 main components in XycLoans:

- the smart contracts.

- backend functions to build a database, scale, and make the front end faster.

- a web app to graphically develop contracts that use flash loans without coding knowledge.

- a high-quality web app for lenders to manage their liquidity.

## The Protocol

We have already written the PoC contracts for the protocol, which can be found here. We also already have simple tests that show how borrowing and lending would work and we are looking forward to making more complex tests for edge cases. The specifics of how the protocol works are written in the Litepaper, which we recommend reading (sections 4 and 5) if you wish to understand the math and workflows under the hood when lending and borrowing.

## Backend functions

In order to scale more efficiently and make the front ends faster, we'll write and deploy a set of backend functions that listen for contract events such as when the vault mints new fee shares or when the vault pays out the yield to lenders. The functions will subsequently build a database that can be queried by the front end (for example, the total profit of a lending token pool).

## Contract-building app

Flash loans usually target developers and other DeFi protocols, but having a web app like Furucombo that allows leveraging flash loans and profit from them will expand the target audience also network-wise.

## Lenders app

In a DeFi protocol, a high-quality web app that allows investors to manage their money is crucial. This web app will allow lenders to efficiently provide and monitor their liquidity in the various token pools, and know how much yield they are earning.

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Previous Project(s)
SCF #11
Award recipient
A modern cloud LaTeX editor with a google docs alike UX and UI, and a built-in Stellar decentralised documents marketplace.
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SCF #10
Award recipient
Xycloo: sTeX & Stensitive
Stellar-based modern LaTeX editor, sensitive data storage on Stellar & more.
Learn more
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Additional information

# What are flash loans?

Flash loans are a financial instrument that makes uncollateralized borrowing possible thanks to a smart contract’s ability to revert a state-changing transaction in the event that a particular condition is or is not met.

This allows a contract to lend money and revert the transaction if the borrower doesn’t return the money plus interest. Flash loans thus happen within one transaction, which will fail if the borrower can’t repay the loan.

Their use case is still being pioneered, but there already are some well-known activities that are improved with flash loans:

- arbitrage trading.

- CDP liquidation.

- Collateral swapping.

- Unwinding debt positions.

These use cases are better described in the last section of the Litepaper.

# Budget

The "Deliverables & Budget" section will show what we intend to use the budget for. Most of the budget is for our development and deployment costs, but deliverables like:

- the app for lenders and possibly also the contract-building app will require us to hire a professional front-end developer in order to deliver a high-quality application. We will however take care of everything related to querying data and interacting with Soroban.

- the instructional videos and graphics will require us to hire a digital video expert.

# The lenders' app

The app will have:

- a dashboard where the lenders can monitor where their money is and how much they're earning.

- a page for every pool the lender has put money into, with stats about the investment (how many fee shares they own, how much money they amount to, etc) and with controls to provide more liquidity or withdraw fees.

- a page to explore the various pools available in the protocol.

- a page with the stats of each pool (total value, historical earnings, etc).

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