No Intrest Loan

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  Flow Diagrams

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  User repay laon

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  Monitor loans

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  Create Loan

Inspiration

Traditional lending systems, both in TradFi and DeFi, often push people into a cycle of compounding debt. We asked ourselves: What if people could borrow money without falling into interest-based debt, and instead grow their savings while borrowing? In many regions, people hold long-term savings in a stable form, such as gold or property. On chain, staking DOT and receiving vDOT can serve a similar purpose: a productive savings asset that grows while held. Our goal is to encourage users to stake even more of their savings and still enjoy liquidity when needed. We found a compelling opportunity to build a Sharia-compliant, interest-free lending model where wealth building is collaborative, not extractive.

What it does

No Interest Loans increases the liquidity potential of liquid staking tokens such as vDOT by providing access to stablecoin loans. This encourages users to remain staked while borrowing against their positions. Our model prioritises safety and stability across all participants: lenders, borrowers, and liquidators. Users can borrow stablecoins against vDOT collateral without paying interest. The loanee enjoys staking rewards on their collateral and earns a percentage of their staked DOT rewards while having access to liquidity. Lenders and the platform receive a share of the staking rewards instead of interest, making the model Sharia-compliant and asset-backed. If the collateral value drops near the loan value with a safety margin, the collateral can be liquidated. A liquidator can repay the loan and buy the collateral at a discount, keeping the system healthy.

How we built it

We built the protocol as a Substrate pallet designed to integrate directly with Bifrost's vDOT liquid staking system. The platform architecture includes on-chain storage and lifecycle for loans, reward-sharing logic based on staking rewards from vDOT, a liquidation mechanism where users can repay unhealthy loans and receive discounted collateral, and a full UI for wallet connection, borrowing, monitoring, and liquidation operations. Users can rotate between three roles at any time. As a borrower, they stake DOT, receive vDOT, use it as collateral to borrow stablecoins, and keep a portion of staking rewards. As a lender, they provide stablecoins and earn part of the staking rewards funded by borrower collateral. As a liquidator, they can repay risky loans and receive vDOT back at a discounted price. All roles share one user base: the community participates in keeping the system stable while growing savings.

Challenges we ran into

Our biggest challenge was integrating the pallet into the Bifrost runtime to access accurate vDOT pricing and reward data. The runtime versioning and outdated tooling caused multiple build failures. We opened an issue to collaborate with the Bifrost team at github.com/bifrost-io/bifrost/issues/1942. While waiting for a resolution, we implemented a temporary version that works without Bifrost in the standard no interest loans branch.

Accomplishments that we're proud of

We created a functional interest-free lending system that encourages users to stake more of their wealth. We developed a reward-sharing model that aligns incentives between borrowers, lenders, and liquidators. We built a mechanism where liquidators receive collateral at a discount rather than through predatory interest. We implemented UI dashboards for all operations: borrowing, repayment, liquidation, and system monitoring. Most importantly, we created a lending system where roles are fluid and the same person can borrow, lend, and liquidate.

What we learned

1. We learned that users strongly value liquidity without sacrificing long-term savings growth. Liquid staking can enable new financial models where rewards replace interest.
2. We discovered that Substrate and Bifrost enable powerful DeFi interoperability between different chains, infrastructure, but runtime integration requires deep knowledge and better tooling.

What's next for No Intrest Loan

1. We will add support for multiple collateral types, including vKSM, vETH and other liquid staking tokens. We're working on improved liquidation logic with auctions and batch liquidation using transparent discount formulas.
2. We will provide a loan offering in case of large loans where multiple lenders provide liquidity for a single pool
3. Partial liquidation so multiple liquidators can participate in loans

Built With

• cargo
• cumulus
• nextjs
• pallet
• rust
• substrat