Ruler Protocol: a non-liquidatable lending market

The demand for crypto-asset lending and borrowing is on the rise. The Block Research has transcribed the evolution of crypto lending since “DeFi summer” last year, where a notable portion of this demand was originally driven by liquidity mining. Decentralized lending market giants such as Aave, Compound, and MakerDAO have denominated the space with a total of more than $17 billion outstanding debt right now. This figure was a mere $139 million 12 months ago before DeFi summer.

In general, these lending markets have a supply pool and a borrowing pool, each having a set of accepted assets. Users can deposit assets into the supply pool, earn interest over time via lending, and unlock some credits for borrowing purposes. Each asset has a protocol-specific assigned “minimum collateralization ratio” (MCR) that determines how much a user can borrow.