How It Works
The Lending Pool Model
Everst operates on a pooled lending model, similar to how traditional banks work, but completely decentralized and transparent.
Traditional Bank vs Everst
Bank controls your money
You control your funds via smart contracts
Opaque interest calculations
Transparent, onchain rates, real-time verifiable
Limited hours and geographic restrictions
24/7 global seamless access
Credit checks and tedious procedures required
No KYC, purely collateral-based
Days for transfers
Instant transactions, second-level confirmations
Centralization risk
Decentralized, no single point of failure
Core Mechanics
1. Liquidity Pools
Each supported asset has its own liquidity pool:
Suppliers deposit assets into the pool, becoming liquidity providers
Borrowers take loans from the pool, paying interest
Interest flows from borrowers to suppliers, accruing in real-time
The protocol takes a configurable reserve fee from the interest spread
In this model, suppliers deposit assets into the pool, borrowers take loans from that pool, interest flows from borrowers back to suppliers, with the protocol taking a reserve fee from the spread as a risk reserve.
2. BTokens: Your Yield Receipts
When you supply assets, you receive BTokens as receipt tokens:
bUSDT - Received for supplying USDT
bAAPL - Received for supplying AAPL tokenized stock
bTSLA - Received for supplying TSLA tokenized stock
bNVDA - Received for supplying NVDA tokenized stock
BToken Properties:
Represent your share of the pool
Automatically accrue interest without manual intervention
Transferable or usable in other DeFi protocols
Redeemable for underlying asset plus interest anytime
BToken Value Growth Mechanism:
When initially supplying 1,000 USDT, you receive 50,000 bUSDT tokens at an exchange rate of 0.02. After one year at 5% APY, those same 50,000 bUSDT tokens can be redeemed for 1,050 USDT as the exchange rate grows to 0.021. This mechanism ensures your yields compound automatically.
3. Dynamic Interest Rate Model
Interest rates adjust automatically based on supply and demand, ensuring market efficiency:
Utilization Rate = Total Borrowed / Total Supplied
0%
0%
2%
No borrowing demand, minimal returns
30%
1.5%
3.5%
Low utilization, moderate yields
50%
2.5%
5%
Market equilibrium
80%
6%
10%
High demand, rates increase
90%
10%
25%
Near capacity, rates jump
95%
15%
40%
Critical level, sharp increase
The model features a "kink" at 80% utilization where rates increase sharply to maintain liquidity. This ensures suppliers can always withdraw funds.
4. Over-Collateralization System
All loans must be over-collateralized to protect protocol security:
Your Borrowing Power = Σ (Each collateral value × Corresponding collateral factor)
Detailed Example:
Suppose you supply:
10,000 USDT (85% collateral factor) → Borrowing power $8,500
$5,000 worth of AAPL tokens (75% collateral factor) → Borrowing power $3,750
$3,000 worth of TSLA tokens (70% collateral factor) → Borrowing power $2,100
Total Borrowing Power = 8,500 + 3,750 + 2,100 = $14,350
5. Health Factor Calculation
Health Factor indicates how safe your position is:
Health Factor = (Total collateral value × Liquidation threshold) / Total borrowed value
Health Factor Levels:
> 2.0: Very safe, no concerns
1.5 - 2.0: Safe position, periodic monitoring
1.0 - 1.5: Warning zone, close attention needed
< 1.0: Liquidation triggered, immediate action required
Practical Calculation Example:
Scenario: You have $10,000 worth of AAPL collateral (80% liquidation threshold), borrowed 5,000 USDT
Initial Health Factor = (10,000 × 0.8) / 5,000 = 1.6 (Safe)
If AAPL price drops 30%, collateral value becomes $7,000: New Health Factor = (7,000 × 0.8) / 5,000 = 1.12 (Risk zone)
You need to immediately add collateral or repay partial debt to avoid liquidation.
Liquidation Process
When a position becomes undercollateralized (Health Factor < 1.0):
1. Liquidation Triggered
Anyone can act as a liquidator
Maximum 50% of debt can be liquidated per transaction
Protects borrowers from malicious liquidation
2. Liquidator Actions
Repays portion of borrower's debt
Receives equivalent collateral + liquidation incentive bonus (5-10%)
Transaction atomicity - all or nothing
3. Liquidation Example:
Borrower situation:
Collateral: $10,000 worth of TSLA tokens
Debt: 8,500 USDT
Health Factor: 0.94 (liquidation triggered)
Liquidation process:
Liquidator repays 4,250 USDT (50% of debt)
Receives $4,675 worth of TSLA (including 10% bonus)
Borrower left with: ~$5,325 collateral, 4,250 USDT debt
Health Factor restored to > 1.0
Oracle Price Feeds
Everst uses redundant price feeds for security and accuracy:
Primary: Chainlink Oracles
Decentralized price aggregation
Updates when price deviates >0.5%
Battle-tested across DeFi
Covers all major tokenized stocks
Secondary: Pyth Network
High-frequency price updates
Sub-second latency
Focused on financial market data
Provides additional redundancy
Price Aggregation
The protocol determines final price by taking data from Chainlink and Pyth.
If oracle prices diverge by more than 2%, the protocol uses the more conservative price:
Lower price for collateral valuation
Higher price for debt calculation
Maximum protocol security
Smart Contract Architecture
The protocol consists of modular, upgradeable contracts:
Core Contracts
Blotroller.sol: Risk management and access control hub
BToken.sol: ERC-20 receipt token implementation
InterestRateModel.sol: Rate calculation logic
BloPriceOracle.sol: Price feed aggregator
Security Features
Timelock: 48-hour delay for admin actions
Emergency Pause: Protocol suspension during crisis
Supply Caps: Maximum protocol exposure per asset
Borrow Caps: Limit total borrowing per asset
Multi-signature: Critical operations require multiple confirmations
Transaction Flow Examples
Supply Asset Flow
User approves token spending
Calls supply function
Protocol transfers tokens from user
Mints corresponding BTokens to user
Interest begins accruing immediately
Borrow Asset Flow
Ensure sufficient collateral
Call borrow function
Protocol verifies collateral requirements
Transfers borrowed assets to user
Begins charging interest
Repay Loan Flow
Approve token spending for repayment amount
Call repay function
Protocol transfers tokens from user
Reduces borrow balance
Releases collateral proportionally
Gas Optimization
Everst is optimized for transaction efficiency across all supported networks:
Supply transaction
~$0.15-0.25
Slightly higher on first supply
Borrow transaction
~$0.20-0.30
Includes multiple checks
Repay transaction
~$0.15-0.25
Simple transfer operation
Withdraw yields
~$0.10-0.15
Lowest cost operation
Gas prices vary by network and current conditions, BSC typically lowest
Advanced Features
Flash Loans
Borrow and repay within single transaction
No collateral required
0.09% fee
Used for arbitrage and liquidations
Batch Operations
Execute multiple operations in one transaction
Save gas costs
Improve capital efficiency
Next Steps
Now that you understand how Everst works:
Get started with Getting Started Guide
Learn about Supported Assets
Understand Risk Management
Explore Advanced Strategies
Technical details subject to change. Always verify current parameters in the app.
💡 Tip: Join our community for the latest strategy sharing and market analysis.
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