Fallback Mechanism

Evoq's fallback mechanism ensures user funds remain liquid and efficiently utilized by combining underlying lending protocols like Venus with a P2P matching engine. Here’s how it works:

• Fully matched

  Evoq's matching engine instantly pairs a supplier with borrowers for complete matching. In this case, there is no need for a fallback, and both parties enjoy a P2P APY.

• Partially matched

  If there are borrowers but not enough to fill the supplier's entire order, the matching engine partially matches their funds. The unmatched portion is supplied to the underlying protocol. The supplier enjoys a P2P APY on the matched portion and the underlying protocol's APY on the remaining funds.

• Unmatched

  If there is no borrowing demand, Evoq's matching engine cannot find a match, so all of the supplier's funds are supplied to the underlying protocol, earning the underlying protocol's APY.

The symmetric scenarios exist when borrowing. However, we need to consider two more cases: withdrawing and repaying.

Withdrawing (1) when supply > borrow, (2) when supply ≤ borrow

If a supplier wants to withdraw their funds while matched, (1) Evoq will try to replace their matched funds with other suppliers waiting to be matched. (2) If there are no other suppliers, Evoq borrows the necessary liquidity from the underlying protocol using other suppliers' assets as collateral and returns it to the supplier. By doing this, the supplier can always seamlessly withdraw all of their assets.

Repaying (3) when supply < borrow (4) when supply ≥ borrow

If a borrower wants to repay while matched, (3) Evoq will first try to replace their matched funds with other borrowers waiting to be matched. (4) If there are no other borrowers, Evoq supplies the excess liquidity to the underlying protocol.