This project is inspired by MakerDAO single collateral DAI platform, which introduced the first defi application - allowing users to create leverage on the ETH.
What it does
This project follows the approach of the battle tested MakerDAO platform, and allows XRD holders to mint RAI at a 1.5:1 ratio. Additional, it introduces a fractional redemption strategy to avoid cascading liquidations. If the protocol calculates that it is insolvent ( less than $1 XRD collateral per outstanding $1 RAI debt), it freezes all positions and allows RAI redemptions only. Redemptions are calculated based on % of supply - each % of RAI may redeem the corresponding % of XRD held in collateral. This limits the effect of cascading liquidations and bank runs, as in the worst case scenario, all RAI holders will always be able to redeem their corresponding share of the collateral pool.
What's next for RAI Lending Platform
More sophisticated liquidation stategies may be explored, allowing position holders to keep more of their original collateral if they have been liquidated.