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  • Introduction
    • Overview
    • FAQ
    • Concepts
      • Liquidity Protocol
      • Supply
      • Borrow
      • Withdraw
      • Liquidations
      • mtTokens
      • Stablecoin
      • Dividends
    • Basic Principles
  • Tokenomics
    • MUTM
      • Allocations
    • Presale Phases
  • Protocol Stability
    • Asset Integration Process
    • Protocol Safeguards and Parameter Framework
    • Market Volatility & Liquidity
    • Price Discovery
    • Address Screening and Wallet Blocking
    • Bug Bounty Program
    • Client Application Security
    • Prevention of Potential Insolvency
    • Model Parameters
    • Mitigating Liquidity Risks for mtTokens
  • Interest Rate Model
    • Borrow Interest Rate and Liquidity Management
    • Stable Interest Rate Model
  • Stablecoin
    • Principle
    • Multi-Asset Collateralization
    • Yield-Generating Collateral
    • Autonomous Minting and Redemption
    • Interest and Discount Rates
    • Issuers
    • Mutuum’s Stablecoin Implementation
    • Borrowing Mutuum’s Stablecoin
    • Repaying and Liquidating Mutuum’s Stablecoin
    • Arbitrage
  • EXTRA
    • L2 Cost Optimization
    • Roadmap
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  • P2C (Peer-to-Contract)
  • P2P (Peer-to-Peer)
  • Collateral and Liquidation

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  1. Introduction
  2. Concepts

Liquidity Protocol

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Last updated 1 month ago

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Mutuum is a decentralized platform designed to bring fluidity and accessibility to lending and borrowing. By offering two primary modes—P2C (peer-to-contract) for more stable assets and P2P (peer-to-peer) for speculative tokens—Mutuum accommodates a wide range of risk appetites, capitalizing on a flexible, trustless environment where users can earn interest, leverage collateral, and protect their positions via overcollateralization.

P2C (Peer-to-Contract)

In the P2C model, lenders pool their assets into audited smart contracts, collectively supplying liquidity to borrowers who provide overcollateralized collateral. Rates for each asset dynamically adjust according to pool usage: as utilization increases, so does the interest rate, incentivizing more suppliers to deposit assets and dissuading excessive borrowing. This system ensures a robust feedback loop that maintains solvency while maximizing capital efficiency.

When depositors provide funds in this mode, they receive mtTokens, representing both their share of the pool and any accrued interest. These mtTokens may also serve as collateral for borrowing other assets. Over time, depositors can withdraw their principal plus earned interest, subject to liquidity availability. Variable borrow rates let experienced borrowers respond to market fluctuations, whereas stable borrow rates allow greater repayment predictability if needed.

P2P (Peer-to-Peer)

For riskier or less liquid tokens—meme coins like PEPE, for instance—Mutuum offers a separate P2P experience, isolating these assets to shield the core pools from undue volatility. Borrowers and lenders negotiate terms directly: interest rates, loan durations, or partial fills. Because there is no shared liquidity pool in P2P, lenders face increased risk—and potentially higher returns—when dealing with volatile assets, while the protocol’s overall safety is preserved.

Collateral and Liquidation

All loans in Mutuum, regardless of whether they occur in P2C or P2P mode, require overcollateralization. The protocol’s “Stability Factor” measures how secure a borrower’s collateral is against their borrowed amount. Should the collateral’s value drop below threshold levels, liquidation is triggered. Liquidators repurchase the outstanding debt at a discount, stabilizing the system and preventing bad debt from affecting other users.