Pool-based P2P Lending

Evoq Finance operates as a bridge between users and lending protocols like the Venus protocol. When suppliers deposit assets into Evoq, the protocol places these assets into the underlying lending protocol and accumulates interest-bearing tokens (ibTokens) in return.

1. A supplier deposits USDC into Evoq. 2. Evoq deposits those USDC into the underlying lending protocol. 3. Evoq receives the interest-bearing token from the underlying protocol.

Now, consider a borrower who interacts with Evoq. The protocol uses the accumulated ibTokens from suppliers to withdraw liquidity from the underlying protocol and transfers it directly to the borrowers. This event is termed a match, indicating a direct peer-to-peer connection between users. From this point, the utilization rate becomes 100%, resulting in improved APYs for both suppliers and borrowers.

4. A borrower deposits ETH as a collateral into Evoq. 5 and 6. It triggers Evoq's matching engine, and Evoq converts the supplier's interest-bearing USDC to USDC. 7. Evoq gives it to the borrower. Now, the borrower is matched with the supplier in a P2P.

If a borrower has not repaid their borrow yet, but a supplier wants to withdraw their funds immediately, Evoq maintains liquidity by borrowing from the underlying protocol, using the borrower’s collateral. This process allows Evoq to refund the exiting supplier and then reconnect the borrower directly with the underlying protocol.

In the end, Evoq is providing the same user experience as the underlying protocol, with the same market risks and the same liquidity but with improved APYs.