**ABSTRACT**

Qoda Finance is a DeFi lending/borrowing protocol for parachain token-denominated loans with three key features: 1) fixed interest rate loans, 2) onchain orderbook model, and 3) support for hybrid overcollateralized/undercollateralized borrows.

Qoda is currently in testnet on Moonbase Alpha and slated to launch on Moonriver in 2022Q4 and Moonbeam in 2023Q1.

Website: https://qoda.fi

App: https://moonbase.qoda.fi

Docs: https://docs.qoda.fi

**MOTIVATION**

Qoda gives an alternative choice of lending/borrowing protocols for users. There are two innovative features that Qoda brings to the Moonbeam ecosystem. The first is Isolated Collateral vs Lending/Borrowing Markets. This allows Qoda to spin up a more aggressive (and perhaps in future iteration, even permissionless) offering of lending/borrowing markets. The second is support for Uncollateralized Institutional Borrowers (a la Maple Finance) that can bring a new base of institutional borrowers into the ecosystem who can offer juicier yields to lenders, which in turn attracts new users to want to park their TVL within the Moonbeam universe.

The Qoda Protocol was built from scratch. Qoda is a completely novel protocol with completely novel concepts and completely novel mechanics. It does not fork any of its code from any other protocols and there are no applications like Qoda anywhere else. While that may mean it may not carry the surefire riskless success that direct ports of proven, successful Ethereum protocols have, it is my opinion that if Moonbeam wants to truly separate itself from other alt L1s, it must take risk to promote dev teams what can create truly novel innovative applications that are native and unique to the Moonbeam ecosystem.

**TEAM EXPERIENCE**

Our core team has strong roots in traditional finance and software development. 

Co-founder Geoffrey Tsui was previously a senior FX high-frequency trader at Deutsche Bank managing the Asia electronic trading business. Co-founder Dhruv Dang has a wide array of prior experience including structured products/fx sales at Deutsche Bank, design at Apple, as well as managing his own software consultancy firm.

The senior engineering team brings expertise specializing in shipping applications built with foundations in functional programming theory as well as developing high frequency trading infrastructure.

Our team prides itself heavily on being able to create innovative new technology from the ground up rather than forking code from existing projects in the market. Our strength is in synthesizing current market trends to invent and develop novel solutions. We also have extensive background and put extreme focus on intuitive, enjoyable design and UX, a detail which we believe will make our product stand out amongst competitors.

**PROJECT OVERVIEW**

**Onchain Orderbook Mechanism**

The heart of Qoda’s mechanism is the Qoda Marketplace, which is an onchain orderbook of fixed interest rate, fixed maturity borrow/lend orders. While AMMs have proven to be most efficient in the volatile, high-frequency spot cryptocurrency market, the relatively lower frequency and lower volatility of the rates market lends itself well to an orderbook mechanism. 

Users can create Quotes, which are onchain orders indicating whether the user is a lender or borrower, how much they wish to borrow or lend, and their desired APR and maturity length. Alternatively, they can browse the list of existing Quotes to pick the terms that suit their needs. In this way, Qoda mimics an orderbook where borrow orders are “bids” and lend orders are “asks”, both sorted by APR, which is the rates analogue for current market price.

![https://ibb.co/1vBR6vd](https://i.ibb.co/gjQtVjP/qoda-marketplace.png)

**Isolated Collateral vs Lending/Borrowing Markets**

Because of Qoda’s innovative on-chain orderbook model, it does not rely on utilization ratios like traditional money market protocols do for lending/borrowing. The advantage this confers is that Qoda can maintain two distinctly isolated classes of assets:  Assets that are enabled for collateral are distinctly segregated from assets that are enabled for lending/borrowing markets.

Before unpermissioned users can borrow, they must first deposit collateral. The list of assets enabled for collateral is highly restrictive. Typically only low-risk, high caliber assets (e.g. stablecoin, BTC, ETH, etc) would be supported as collateral assets.

Meanwhile, the list of assets for which a lending/borrowing market can be spun up can be much more permissively (perhaps in future iterations, even 100% permissionlessly), meaning Qoda can support a broad range of various parachain or altcoin denominated loans (so long as there is a Chainlink oracle or similar service that can reliably mark the value of these assets).

Because collateral assets and lending/borrowing assets are segregated, Qoda can be much more aggressive in its offering of what assets are available for lending/borrowing. This is in contrast to money markets with a global collateral system which needs to be more conservative about what types of assets it permits for lending/borrowing.

Furthermore, Qoda has just released a new feature to build on top of Moonwell. When users now deposit collateral into Qoda, that collateral will be sent to Moonwell and wrapped into mTokens. When they withdraw their collateral, it will be unwrapped back to the underlying collateral asset plus the interest they’ve earned over time. This leads to higher capital efficiency, generates extra yield for Qoda users, and develops synergies between Qoda and the greater DeFi economy of Moonbeam.

**Hybrid Overcollateralized / Undercollateralized Borrows**

In addition to permissionless overcollateralized borrowing, Qoda also supports select whitelisted institutions to be able to participate in its markets without having to supply collateral, up to a predefined credit limit per whitelisted name that is controlled by protocol governance. Qoda is currently in talks with multiple institutions to establish uncollateralized borrow credit limit agreements.

For context, institutional demand for borrowing is generally for dollar-denominated assets, driven by their needs to fund their delta neutral perp funding arbitrage strategies. As long as they don’t have to worry about bridge risks, hack risks, or crypto market risk, these borrowers are generally agnostic to what ecosystem they are participating in. Qoda’s fixed rates are particularly useful for these institutional borrowers, as it reduces the number of risk variables they need to account for in their delta neutral strategies.

Once native USDT becomes prevalent on Moonbeam, my view is this will be the dominant asset of choice demanded by institutional borrowers. Institutional borrowers can generally offer better interest rates to lenders compared to traditional DeFi money markets (See Maple Finance on Ethereum as an indicator of current market rate for uncollateralized stablecoin borrowing). 

Once a steady base of demand from institutional borrowers has been built, the Moonbase ecosystem will have a platform that can offer attractive rates (in size) to lenders. This is important because if lenders can earn competitive yield on their stablecoin on Moonbase, it represents a clear use-case for lenders to move their funds into the ecosystem. Once these users enter the Moonbeam ecosystem, the hope is that there will be stickiness with all the other great apps built on Moonbeam to keep them interested in staying within the ecosystem.

**RATIONALE**

Qoda has onboarded thousands of new users on the testnet app on Moonbase Alpha with potential to convert a large percentage of them when launching on Moonriver/Moonbeam. Furthermore, Qoda will be the first lending/borrowing protocol on Moonbeam to have a hybrid (permissioned) uncollateralized borrow feature, and is a Moonbeam-native protocol built from scratch. We foresee Qoda will offer a new playground of DeFi primitives for users to experiment with that is not available in any other blockchain ecosystems.

**VISION OF SUCCESS**

The grand vision for Qoda Finance is to be the premier hub that integrates institutional and retail fixed term lending/borrowing. In tradfi and even within crypto, there are huge OTC trading desks dedicated to lending/borrowing assets on margin. However, these markets are typically opaque, closed from the general public, and highly inefficient due to the need for all sorts of bilateral agreements for collateral management. The ultimate goal for Qoda is to open these markets to the general public, and to host a unified, decentralized marketplace and interest rate price discovery platform for both retail and institutional lenders and borrowers to settle and clear. See this past blog post for more information on using DeFi to replace OTC lending/borrowing trading desks: https://blog.qoda.fi/on-unifying-defi-and-institutional-otc-lending-borrowing-markets-c5406d71f1f2

Meanwhile, the grand vision for Enso Labs (the company behind Qoda) is to be a powerhouse shop developing a suite of synergistic “glue” apps on Moonbeam to create a great DeFi app experience for existing and new users. Future products we have in mind in the pipeline include DEX aggregator, DEX limit orders, and oracle-based perp DEXes.

**OVERALL COST OF THE GRANT**

$300k - $500k USD / USDC Over 6 Months

**USE OF GRANT**

While most other grants so far have focused on using funds primarily for liquidity incentives, we would like to request for grant funding primarily for new developer hires, which is why we’ve requested for USD/USDC-denominated funding. It is our opinion that it is fruitful to use grant funds for onboarding new builders just as much if not more than using the funds to onboard new users via liquidity incentives. This is the key to investing in building an alternative, unique DeFi experience to users with alternative, unique DeFi applications that only Moonbeam can offer.

Since Qoda is a new protocol built from scratch, the audit process needs to be handled more thoroughly and with more care compared to forks of existing repos. We would like to also dedicate a portion of our grant request towards completing a full audit of the Qoda codebase.

**TIMELINE & MILESTONES**

Hiring: 4-8 weeks

If funds are granted, we would like to immediately begin sourcing for one senior developer and one UI/UX designer hire. Our founding team has an excellent track record of onboarding new hires and strong pipelines to scoop up extraordinary talent from tradfi and web2 within our personal networks with express interest for an opportunity to enter the space.

Moonriver Launch: 8 - 12 weeks

Qoda is currently live on testnet. We are polishing off the token rewards system and ramping up our marketing efforts and will be ready and aiming to launch on Moonriver in Nov 2022.

Audit: 12 - 24 weeks

Concurrent with our Moonriver launch, we will be prioritizing a full audit of Qoda smart contracts. Audit partner TBD.

Liquidity Incentives: 12 - 24 weeks

The Qoda Protocol currently has three forms of liquidity incentives present for users: 1) trading rewards (denominated in QODA) by volume for users who lend or borrow from the platform, 2) staking rewards (denominated in QODA) for tokenholders who stake their QODA tokens, and 3) WGLMR rewards which are protocol fees generated by protocol activity which will be redistributed to all (staked) tokenholders. All of these incentives are endogenous rewards purely supplied by the Qoda team for the community. Charts and schedules can be provided upon request of our current incentive program.

We believe that the majority of liquidity incentives should be provided by the team to its users However, we also recognize the short term boost that exogenous GLMR incentives can bring in terms of  attention and activity for a protocol. Any leftover funds from this grant proposal will be directed towards liquidity incentives, specifically for incentivizing users to LP QODA tokens on various DEXes.

**CONCLUSION**

We have requested for what we feel to be a modest grant sum but which our team can utilize with an effective force multiplier to build and strengthen the Moonbeam ecosystem overall. We hope that the community recognizes the importance of encouraging and investing in not just the incumbent apps in the space but also smaller teams like ours that are putting our heads down working hard to build new inroads towards a more vibrant ecosystem on Moonbeam. 

Thank you for your consideration in reading our initial grant proposal and look forward to discussion in the comments.


: 
1. Qoda Finance is a DeFi lending/borrowing protocol for parachain token-denominated loans with three key features: fixed interest rate loans, onchain orderbook model, and support for hybrid overcollateralized/undercollateralized borrows. 
2. Currently in testnet on Moonbase Alpha and slated to launch on Moonriver in 2022Q4 and Moonbeam in 2023Q1. 
3. Core team has strong roots in traditional finance and software development. 
4. Onchain orderbook mechanism does not rely on utilization ratios like traditional money market protocols. 
5. Supports hybrid overcollateralized/undercollateralized borrows and just released a new feature with Moonwell. 
6. Requesting an USD/USDC-denominated grant of $300k - $500k over 6 months for new developer hires, full audit of codebase and (if any leftover funds) liquidity incentives. 
7. Short term timeline aims for Moonriver launch in Nov 2022.

#204 Qoda Protocol Grant Proposal