What PolyLend Does

PolyLend is a peer-to-peer lending protocol that lets users borrow USDC against Polymarket conditional token positions (ERC-1155). The design is heavily inspired by:

• Blend – perpetual NFT lending with oracle-free liquidations via refinancing auctions

• PolyLend (Polymarket’s prototype) – a fixed-rate, over-collateralized lending system for conditional tokens with a 24-hour Dutch auction on loan termination

Key properties:

• Oracle-free risk management: No price oracles. Risk is managed purely via over-collateralization and lenders’ credit decisions.

• Peer-to-peer: Each loan is a bilateral agreement between a borrower and a lender.

• Over-collateralized: Collateral value is expected to exceed the principal at the time of loan initiation.

• Callable loans with Dutch auction: After a minimum duration, the lender can “call” the loan, kicking off a 24-hour interest-rate auction. Either a new lender refinances at a higher rate or the lender can reclaim collateral.

• Continuous compounding: Interest accrues continuously per second via InterestLib.