Lines of Credit technical details

AutomatedLineOfCredit is a contract that serves as a lending pool of funds managed by the borrower, who is the sole party who can borrow the funds. The borrower can: borrow funds, repay funds, set AutomatedLineOfCredit max size, add/remove deposit strategies, add/remove withdraw strategies, and change the transfer strategy. The borrower can also upgrade the AutomatedLineOfCredit implementation.

AutomatedLineOfCredit satisfies ERC-4626 requirements, meaning it meets all features described here.

An audit of AutomatedLineOfCredit and AutomatedLineOfCreditFactory by g0 Group can be found here: https://github.com/g0-group/Audits/blob/master/TrueFiDec2022.pdf

Details on Automated Line of Credit and related contracts can be found in Github below:

GitHub - TrueFi-Protocol/contracts-berylliumGitHub

Deployed Contracts

Contract name	Network	Address
beryllium_automatedLineOfCredit	Arbitrum One	0x8626a4234721A605Fc84Bb49d55194869Ae95D98
beryllium_automatedLineOfCreditFactory	Arbitrum One	0x24d00e171Da01124052a4B13931631Ba7482cBB5
beryllium_automatedLineOfCreditFactory_proxy	Arbitrum One	0xCA1353dAB799d87D70E3750c2280205A5c8f62e9
beryllium_protocolConfig	Arbitrum One	0xBC70FE8653D972936507F7306996d8F8E6823482
beryllium_protocolConfig_proxy	Arbitrum One	0x5c67531524201D0a774405827BA4c2DE15781dD0
beryllium_depositController	Arbitrum One	0xB4C8bfd082a47c008Ce95DD13314105F6C0fe372
beryllium_allowAllLenderVerifier	Arbitrum One	0x607CEDb42442E206FAe3E2Cc12AFddD7e12Fdd4F
beryllium_withdrawController	Arbitrum One	0xEe3f9Add26de00FCC02d4BC0E6d0DBEe0e3C25E6
beryllium_openTransferController	Arbitrum One	0xa1259068Ea5252a307ced730d758c2E8D7ae177f

Notes

AutomatedLineOfCreditFactory

AutomatedLineOfCreditFactory serves for deploying new AutomatedLinesOfCredit. All of the AutomatedLineOfCredit parameters are chosen by the borrower, except for ProtocolConfig.

Interest rate calculations

When a borrower repays a given amount of borrowed funds, they owe interest. This interest is added to their balance of the outstanding debt. The amount of interest they owe is based on the utilization rate of the funds in the AutomatedLineOfCredit at the time they repay a given amount of debt. The interest rate that the Borrower pays on their funds is a function of the utilization of the AutomatedLineOfCredit. This function is parameterized by six values which are determined by the borrower when the AutomatedLineOfCredit is created:

• A (1) minimum interest rate utilization threshold up to which point the interest rate is equal to the (2) minimum interest rate,

• An (3) optimum utilization rate and (4) optimum interest rate. The interest rate is determined by linearly interpolating between the minimum interest rate and the optimum interest rate when the utilization rate is between the minimum interest rate utilization threshold and the optimum utilization rate,

• A (5) maximum interest rate utilization threshold beyond which the interest rate is equal to the (6) maximum interest rate. The interest rate is determined by linearly interpolating between the optimum interest rate and the maximum interest rate when the utilization rate is between the optimum utilization rate and the maximum interest rate utilization threshold.

The utilization of an AutomatedLineOfCredit is equal to:

(borrowed_funds + unpaid_interest) / value

The value of an AutomatedLineOfCredit is equal to:

liquid_funds_in_ALOC + borrowed_funds + unpaid_interest - unclaimed_fees

When the Borrower borrows from the AutomatedLineOfCredit, utilization increases. When a Lender deposits into the AutomatedLineOfCredit, utilization decreases. When a Lender withdraws from the AutomatedLineOfCredit, utilization increases.

Fees

Whenever an action that changes AutomatedLineOfCredit value is performed (borrow/repay/deposit/mint/withdraw/redeem/updateAndPayFee), a fee for the TrueFi DAO is calculated and immediately transferred to the TrueFi DAO Treasury address. The fee is deducted from the AutomatedLineOfCredit value, so actions like borrow/withdraw/redeem cannot move the funds that are designated as fees. If the accrued fee cannot be repaid at the moment because of the lack of liquidity, additional information about the fee amount is stored in the contract and will be used to make the overdue payment the moment it will be possible.

The accruedFee value is equal to:

(current_timestamp - last_update_timestamp) / YEAR * protocol_fee_rate * portfolio_value

**portfolio_value does not take into account the interest that has been accrued since the last update.

protocol_fee_rate is the rate taken from the ProtocolConfig contract the last time an update was made. This means that if the DAO decides to increase the fees, the higher rate will be applied for accruedFee calculation since the next update, not the current one.

Deposit / Withdrawal Strategies

Functions enabling Lenders to deposit/withdraw funds to/from the contract can additionally be limited by Deposit/Withdraw Strategy. These strategies (if set), are called with a hook every time a specific action is performed on the contract. The same calldata as for the initial call is passed to them and then the strategy independently decides if this action can or cannot be performed. The strategies might also write some state to themselves on such hooks, but this is not a mandatory behavior.