Markets
Understanding Linx Markets
Linx Markets are the core building blocks of the Linx Lending protocol. Each market represents an independent lending pool pairing a specific collateral token with a borrowable asset on Alephium blockchain.
Core Concept: When you create a market, you're establishing an isolated venue where lenders can supply one asset and borrowers can use another asset as collateral to borrow against it. Think of each market as its own mini-protocol with defined rules that never change.
Alephium Implementation: Subcontracts
On Alephium, each Linx Market is deployed as an independent subcontract. This architectural choice leverages Alephium's contract model to ensure true market isolation - each market has its own state, storage, and execution context. Unlike pooled lending systems where all markets share state, Linx Markets are genuinely separate entities on-chain.
This subcontract approach provides several benefits:
True isolation: Markets cannot interfere with each other at the contract level
Clear ownership: Each market's state and logic is self-contained
Market Parameters
Every Linx Market is defined by five immutable parameters set at creation:
1. Collateral Token The asset borrowers must deposit to secure their loan. Must be a fungible token on Alephium.
2. Loan Token The asset available for borrowing. Lenders supply this token to earn interest. Must be a fungible token on Alephium.
3. LLTV (Liquidation Loan-to-Value) The maximum ratio of loan value to collateral value before a position becomes liquidatable.
Example: 80% LLTV means you can borrow up to $80 worth of loan tokens for every $100 of collateral
If your loan value exceeds this threshold (even by $0.01), your position can be liquidated
4. Oracle Address The smart contract that provides price data for the collateral/loan pair. Linx is oracle-agnostic - any pricing mechanism can be used.
5. Interest Rate Model (IRM) The smart contract containing the formula for calculating borrowing interest rates based on market utilization.
Market Naming Convention
Markets follow this format:
Example:
Immutability & Permanence
Once a market is created on Linx, its parameters cannot be modified. This immutability provides:
Predictability: Lenders and borrowers know the rules won't change
Security: No governance can alter market behavior after deployment
Trust: The market will function identically as long as Alephium exists
Permissionless Creation
Unlike traditional lending platforms requiring governance votes for new asset listings, anyone can create a Linx Market. This openness enables:
Long-tail asset markets that governance might reject
Experimental collateral types and risk parameters
Faster market deployment for new tokens
Innovation without permission
Guardrails: While market creation is permissionless, LLTV and IRM must be selected from protocol-approved options to maintain security standards.
How Markets Work
For Lenders (Suppliers):
Deposit loan tokens into a specific market
Earn interest from borrowers
Withdraw supplied tokens plus interest (when liquidity available)
For Borrowers:
Deposit collateral tokens into a market
Borrow loan tokens up to the LLTV limit
Pay interest on borrowed amount
Repay loan to reclaim collateral
For Liquidators: When a borrower's position exceeds the LLTV threshold, liquidators can:
Repay a portion of the debt
Receive a discounted portion of the collateral
Earn profit from the liquidation bonus
Risk Isolation
Each Linx Market operates independently. If one market experiences issues (bad debt, oracle failure, extreme volatility), other markets remain unaffected. This isolation allows:
Higher risk markets for volatile assets
Conservative markets for stable pairs
User choice based on risk tolerance
No systemic contagion
Last updated
Was this helpful?