Finance Overview

RedCarpetHQ integrates DeFi (Decentralized Finance) features that allow producers and supporters to leverage their tokens and USDC for additional value.

DeFi Features

For Token Holders

Lending (Deposit USDC)

  • Deposit USDC into token-specific vaults

  • Earn interest from borrowers

  • Receive ERC4626 vault shares

  • Withdraw anytime (subject to liquidity)

    • Borrowing (Use Tokens as Collateral)

  • Deposit campaign tokens as collateral

  • Borrow USDC against token value

  • Pay interest on borrowed amount

  • Flexible repayment

    • Trading

  • Buy/sell tokens on marketplace

  • Create buy/sell offers

  • Participate in trading contests

  • Earn fee rewards

    • Dividends

  • Receive film revenue distributions

  • Claim proportional to holdings

  • Multiple distribution rounds

  • Snapshot-based fairness

    • For Producers

    Revenue Tools

  • Distribute dividends to token holders

  • Create redemption events

  • Manage token economics

  • Engage community financially

    • Liquidity Access

  • Borrow against own tokens

  • Access working capital

  • Flexible financing

  • No traditional lenders needed

    • Fee Income

  • Earn 10% of trading fees

  • Passive income from token activity

  • Automatic distribution

  • Long-term alignment

    • UnifiedVault Architecture

    Each graduated token has its own ERC4626-compliant vault.

    Vault Structure

    ``
    ┌─────────────────────────────────────┐
    │ UnifiedVault (Token X) │
    ├─────────────────────────────────────┤
    │ │
    │ Total USDC: $100,000 │
    │ │
    │ ┌───────────────────────────────┐ │
    │ │ Lending Pool (80%) │ │
    │ │ $80,000 │ │
    │ │ - Available for borrowing │ │
    │ │ - Earns interest │ │
    │ └───────────────────────────────┘ │
    │ │
    │ ┌───────────────────────────────┐ │
    │ │ Stability Pool (20%) │ │
    │ │ $20,000 │ │
    │ │ - Auto-liquidations │ │
    │ │ - Collateral gains │ │
    │ └───────────────────────────────┘ │
    │ │
    │ ┌───────────────────────────────┐ │
    │ │ Insurance Fund │ │
    │ │ $5,000 │ │
    │ │ - Funded by interest │ │
    │ │ - Bad debt coverage │ │
    │ └───────────────────────────────┘ │
    │ │
    └─────────────────────────────────────┘
    `

    Deposit Allocation

    When you deposit USDC:
    `
    Deposit: 1,000 USDC

    Automatic Split:
    ├─ 800 USDC → Lending Pool (80%)
    └─ 200 USDC → Stability Pool (20%)

    You Receive: 1,000 vault shares
    Complexity: Hidden from user
    `

    Interest Accrual

    Interest earned from borrowers is split based on risk tier:

    GREEN Tier (Healthy)
    `
    100 USDC interest earned:
    ├─ 4 USDC → Protocol (4%)
    ├─ 6 USDC → Insurance Fund (6%)
    └─ 90 USDC → Lenders (90%)
    `

    YELLOW Tier (Moderate Risk)
    `
    100 USDC interest earned:
    ├─ 6 USDC → Protocol (6%)
    ├─ 9 USDC → Insurance Fund (9%)
    └─ 85 USDC → Lenders (85%)
    `

    RED Tier (High Risk)
    `
    100 USDC interest earned:
    ├─ 10 USDC → Protocol (10%)
    ├─ 15 USDC → Insurance Fund (15%)
    └─ 75 USDC → Lenders (75%)
    `

    Risk Tiers

    The RiskOracle assesses each token's risk level continuously.

    Tier Definitions

    | Tier | Color | Risk Level | Collateral Factor | Liquidation Threshold |
    |------|-------|------------|-------------------|----------------------|
    | 0 | 🟢 GREEN | Low | 50% | 60% |
    | 1 | 🟡 YELLOW | Medium | 40% | 50% |
    | 2 | 🔴 RED | High | 30% | 40% |

    Risk Factors

    Price Staleness

  • GREEN: Updated within 1 hour

  • YELLOW: Updated within 6 hours

  • RED: Stale > 6 hours

    • Vault Utilization

  • GREEN: < 85%

  • YELLOW: 85-95%

  • RED: > 95%

    • Market Health

  • Wash trading detection

  • Unique participant count

  • Trade frequency

  • Volume patterns

    • Disputes

  • OptimisticPriceOracle disputes

  • Price manipulation attempts

  • Community reports

    • Tier Impact

    On Borrowing:

  • Lower collateral factor = less borrowing power

  • Higher liquidation risk

  • Reduced supply caps

    • On Interest:

  • More to insurance fund

  • More to protocol

  • Less to lenders

    • On Deposits:

  • Risk-based caps

  • Minimum liquidity requirements

  • Circuit breaker thresholds

    • Interest Rate Model

    Dynamic interest rates based on utilization.

    Jump Rate Model

    `
    Interest Rate = Base Rate + (Utilization × Multiplier)

    If Utilization > Optimal (70%):
    Interest Rate = Base + (Optimal × Multiplier) +
    ((Utilization - Optimal) × Jump Multiplier)
    `

    Rate Curve Example

    `
    Utilization | Interest Rate (APY)
    ------------|--------------------
    0% | 2%
    25% | 5%
    50% | 8%
    70% | 12% (Optimal)
    80% | 20%
    85% | 35% (Max, no more borrowing)
    `

    Why This Works

    Low Utilization:

  • Low rates encourage borrowing

  • Lenders earn less but safe

  • Capital underutilized

    • Optimal Utilization (70%):

  • Balanced rates

  • Good returns for lenders

  • Reasonable cost for borrowers

    • High Utilization (>70%):

  • High rates discourage borrowing

  • Encourages repayment

  • Protects lender liquidity

    • Maximum (85%):

  • Hard cap prevents bank runs

  • Always 15% available

  • Safety mechanism

    • Liquidation System

    When Liquidation Occurs

    `
    Collateral Value / Borrowed Amount < Liquidation Threshold

    Example:
    Collateral: 100 tokens @ $10 = $1,000
    Borrowed: $500
    Ratio: 50% (safe)

    Price drops to $8:
    Collateral: 100 tokens @ $8 = $800
    Borrowed: $500
    Ratio: 62.5% > 60% threshold
    → LIQUIDATION TRIGGERED
    `

    Liquidation Process

    Step 1: Stability Pool Liquidation
    `
    1. Stability pool USDC repays debt
    2. Borrower's collateral seized
    3. Collateral distributed to stability depositors
    4. Pro-rata based on deposits
    `

    Step 2: Auto-Sell Collateral
    `
    1. Vault holds seized tokens
    2. Creates sell offer on Market
    3. Discounted price (10% bonus)
    4. Buyers get discount
    5. USDC returns to stability pool
    `

    Step 3: Insurance Fund (If Needed)
    `
    If bad debt remains:
    1. Insurance fund covers shortfall
    2. Protects lender deposits
    3. Maintains vault solvency
    `

    Liquidation Bonus

    10% Liquidation Bonus
    `
    Debt: $500
    Collateral seized: $550 worth (10% bonus)

    Liquidator profit: $50
    Incentivizes quick liquidation
    `

    Protocol Liquidation Fee

    2% Protocol Fee
    `
    Collateral seized: $550
    Protocol fee: $11 (2%)
    To liquidator: $539

    Funds platform operations
    `

    Fee Structure

    Trading Fees (2.5%)

    `
    Trade: 100 tokens @ $10 = $1,000
    Fee: $25 (2.5%)

    Distribution:
    ├─ $10 → Protocol Treasury (40%)
    ├─ $10 → Trading Contest (40%)
    ├─ $2.50 → UnifiedVault (10%)
    └─ $2.50 → Producer (10%)
    ``

    Borrowing Fees

    Interest Only

  • No origination fee

  • No early repayment penalty

  • Only pay interest on borrowed amount

  • Accrues per block

    • Liquidation Fees

    Liquidation Bonus: 10%

  • Paid by borrower

  • Incentivizes liquidators

    • Protocol Fee: 2%

  • On liquidated collateral

  • Funds platform

    • Withdrawal Fees

    None

  • Free to withdraw from vaults

  • Only gas fees

  • No time locks (if liquidity available)

    • Capital Efficiency

    For Lenders

    Single-Sided Deposits

  • Only deposit USDC

  • No impermanent loss

  • Predictable returns

  • ERC4626 standard

    • Auto-Compounding

  • Interest auto-reinvested

  • Vault shares appreciate

  • No manual claiming

  • Gas-efficient

    • Liquidity

  • Withdraw anytime

  • Subject to utilization

  • 15% always available

  • No lock-ups

    • For Borrowers

    Flexible Collateral

  • Use campaign tokens

  • No selling required

  • Maintain upside exposure

  • Flexible repayment

    • No Fixed Terms

  • Borrow indefinitely

  • Repay anytime

  • No maturity dates

  • Interest-only payments

    • Leverage Opportunities

  • Borrow to buy more tokens

  • Increase position size

  • Amplify returns (and risks)

  • Sophisticated strategies

    • Safety Mechanisms

    4-Layer Protection

    Layer 1: Collateral

  • Borrower's tokens

  • First line of defense

  • Liquidation at threshold

    • Layer 2: Stability Pool (20%)

  • Auto-liquidation buffer

  • Instant USDC available

  • No external liquidators needed

    • Layer 3: Insurance Fund

  • Funded by interest

  • Covers bad debt

  • Grows with protocol

    • Layer 4: Protocol Treasury

  • Last resort backstop

  • Emergency situations

  • Governance-controlled

    • Circuit Breakers

    Automatic Pauses When:

  • Bad debt > $10,000

  • Utilization > 99%

  • Price stale > 12 hours

    • Purpose:

  • Prevent cascading failures

  • Protect user funds

  • Allow intervention

    • Risk Oracle Monitoring

    Continuous Assessment:

  • Price staleness

  • Utilization levels

  • Wash trading

  • Market health

    • Automatic Adjustments:

  • Tier changes

  • Parameter updates

  • Supply caps

  • Interest splits

    • Getting Started

    As a Lender

    1. Choose Token: Browse graduated campaigns
    2. Check Risk: Review tier and APY
    3. Deposit USDC: Enter amount and confirm
    4. Earn Interest: Automatic accrual
    5. Withdraw: Anytime (subject to liquidity)

    As a Borrower

    1. Deposit Collateral: Transfer tokens to vault
    2. Check Limit: See max borrow amount
    3. Borrow USDC: Specify amount
    4. Monitor Health: Watch collateral ratio
    5. Repay: Pay back anytime to unlock collateral

    Risk Management

    For Lenders:

  • ✅ Diversify across tokens

  • ✅ Monitor risk tiers

  • ✅ Understand utilization

  • ✅ Check insurance fund

    • For Borrowers:

  • ✅ Maintain safe collateral ratio

  • ✅ Monitor price changes

  • ✅ Set price alerts

  • ✅ Keep extra collateral ready

    • Next Steps:

  • Learn Lending & Borrowing →

  • Understand Dividends →

  • Explore Fee Structure →