Overview

Supply - Earn and Collateralize

Supplying assets to Tokos allows users to earn interest and, optionally, use their supplied tokens as collateral for borrowing. When an asset asset is supplied, a corresponding amount of aTokens (e.g., aUSDC, aWETH) are minted to the recipient address, which are interest-bearing ERC-20 tokens representing balance of underlying tokens that increases in balance over time by accruing yield from the borrowing activity in the pool.

Withdrawing is the process of redeeming aTokens for the underlying asset, including any accrued interest. Withdrawals are subject to availability of unborrowed liquidity enforced through over-collateralizaiton and interest rate mechanism, and the collaterization of any active borrow positions.

Borrow - Manage Exposure

Borrowing enables users to access liquidity by utlizing supplied assets as collateral. This process is always overcollateralized, meaning the value of the collateral exceeds the borrowed amount. The protocol manages risk through a Health Factor, which determines the safety of a user's position, and liquidation thresholds, which trigger collateral liquidation if the Health Factor drops below parameter threshold. When a user borrows assets, their borrow position balance is represented by variableDebtTokens (e.g., variableDebtUSDC), which are ERC-20 tokens that track the outstanding borrow balance and accrue interest over time.

Repayment of borrowed assets can be done at any time, and borrow positions are indefinite as long as the overcollateralization is maintained. The Health Factor fluctuates based on the value of the supplied collateral and the borrowed assets, which can change with market conditions and accrued interest. Tokos utilizes oracles to provide real-time price feeds of the assets, providing inputs to the calculation of the Health Factor and triggering liquidations when necessary to maintain the protocol's over-collateralization.