Collateralized Lending

Collateralized borrowing refers to the process whereby users borrow $BTCX assets on the Shell Finance platform by collateralizing inscription assets. The entire process of collateralized borrowing is completed in a single transaction, and users do not need to transfer assets to any trusted entity. Currently, Shell Finance supports assets such as Ordinals Protocol and Atomicals Protocol, calculating the collateral value based on real-time quotes from the price oracle and determining the loan amount that can be borrowed based on the system's set collateral ratio.

Using a BRC-20 asset $ORDI (assuming the price of $ORDI is 225,000 SATS/ORDI and the minimum collateral ratio is 150%), users can collateralize 100 $ORDI and pay a certain amount of borrowing and gas fees. They can borrow up to a maximum of 0.15 $BTC worth of $BTCX loans.

As indicated above, when a borrower initiates a loan:

• Shell Finance requests Alex Oracle to obtain the asset price of $ORDI to calculate the loan amount and collateral ratio, determining the maximum amount of $BTCX the borrower can borrow.

• The borrower confirms the amount of $BTCX needed for the loan. Shell Finance calculates the liquidation price based on the borrower's loan amount and requests the initialization of a DLC contract from Alex Oracle. The Alex Oracle holds the "secret" of the DLC contract.

• Shell Finance creates a 2-of-2 multi-signature wallet as the Vault, with shared private keys based on the "secret" of the DLC contract. The borrower deposits the collateral asset $ORDI into the Vault and completes the signing of the DLC contract transaction.

• Shell Finance disburses the loan of $BTCX to the borrower, who pays Shell Finance the protocol fee.