ETH Lending Protocol

A decentralized lending protocol that allows users to borrow PYUSD stablecoin using ETH as collateral, with automatic yield generation through LIDO staking.

Demo | Pitchdeck

🌟 Features

• Borrow PYUSD: Use ETH as collateral to borrow PYUSD stablecoin
• Flexible Liquidation Ratios: Choose between 50-80% liquidation ratio based on your risk tolerance
• NFT Loan Positions: Each loan is represented as an ERC-721 NFT that can be transferred or traded
• sPYUSD (Staked PYUSD): Interest-bearing token that automatically increases in value
• Short Position Hedging: Optional 0-30% short position to hedge against ETH price drops
• Automatic Yield: Deposited ETH generates staking rewards through LIDO
• Liquidation Bonus: 0.1% bonus for liquidators to ensure healthy protocol operation

📊 Protocol Stats

• Network: Sepolia Testnet
• Total Value Locked: Dynamic
• Exchange Rate: Real-time sPYUSD appreciation
• Liquidation Bonus: 0.1%

🏗️ Architecture

Smart Contracts

• EthereumLendingPool: Main lending pool contract

  • Address: 0xe27462f8F471335cEa75Ea76BDDb05189cd599d4
  • View on Etherscan

• StakedPYUSD: Interest-bearing ERC-20 token

  • Address: 0x48D54257dE5824fd2D19e8315709B92D474b0E05
  • View on Etherscan

• EthereumLoanNFT: ERC-721 loan position NFT

  • Address: 0xDA4C5Fd30104b1aF06a73C9AB019E3ece16DC529
  • View on Etherscan

Technology Stack

• Smart Contracts: Solidity 0.8.28, Hardhat 3.0.7, OpenZeppelin 5.0.1
• Frontend: Next.js 15, React 19, TypeScript
• Web3: wagmi v2, viem, RainbowKit
• Oracle: Pyth Network
• Staking: LIDO (Mock on testnet)

🚀 Getting Started

Prerequisites

• Node.js 18+
• npm or yarn
• MetaMask or another Web3 wallet
• Sepolia testnet ETH

Installation

# Clone the repository
git clone <repository-url>
cd eth-online

# Install dependencies
npm install

# Install frontend dependencies
cd frontend
npm install
cd ..

Configuration

1. Copy .env.example to .env:

cp .env.example .env

2. Fill in your environment variables:

SEPOLIA_RPC_URL=https://eth-sepolia.g.alchemy.com/v2/YOUR_API_KEY
PRIVATE_KEY=your_private_key_here
ETHERSCAN_API_KEY=your_etherscan_api_key

Compile Contracts

npm run compile

Deploy Contracts

# Deploy to Sepolia testnet
npm run deploy:updated

# Deploy locally for testing
npm run node  # In one terminal
npm run deploy:local  # In another terminal

Run Frontend

cd frontend
npm run dev

Visit http://localhost:3000 to interact with the protocol.

📖 How It Works

For Lenders (Liquidity Providers)

1. Supply PYUSD: Deposit PYUSD into the protocol
2. Receive sPYUSD: Get interest-bearing sPYUSD tokens
3. Earn Interest: sPYUSD automatically increases in value as borrowers pay interest
4. Withdraw: Burn sPYUSD to receive PYUSD + earned interest

Example:

Day 0:   Supply 10,000 PYUSD → Receive 10,000 sPYUSD
Day 30:  Exchange Rate = 1.05
         Your 10,000 sPYUSD = 10,500 PYUSD (5% gain)
Day 60:  Exchange Rate = 1.10
         Your 10,000 sPYUSD = 11,000 PYUSD (10% gain)

For Borrowers

1. Deposit ETH: Provide ETH as collateral
2. Choose Parameters:
   • Liquidation Ratio (50-80%)
   • Short Position Ratio (0-30%)
3. Borrow PYUSD: Receive PYUSD stablecoin
4. Repay + Interest: Pay back to retrieve collateral
5. NFT Position: Your loan is an NFT you can transfer

Liquidation Example:

Loan: 1 ETH @ $2,000 = $2,000 collateral
Borrow: $1,000 PYUSD (50% LTV)
Liquidation Ratio: 50%

Safe Zone: ETH price > $1,000 (50% drop tolerance)
Liquidation: ETH price drops to $1,000
Result: Liquidator repays debt, receives collateral + 0.1% bonus

🔐 Security Features

• ✅ ReentrancyGuard: Protection against reentrancy attacks
• ✅ Pausable: Emergency pause functionality
• ✅ Ownable: Admin access control
• ✅ Input Validation: Comprehensive parameter checks
• ✅ Safe Math: Solidity 0.8.28 overflow protection
• ✅ Liquidation Bonus: Incentivizes healthy protocol operation

🧪 Testing

# Run tests (when plugins are available)
npm test

# Test on Sepolia
npm run test:sepolia
npm run test:borrow
npm run test:liquidation

📚 Documentation

• Lending Protocol Overview
• sPYUSD Deployment Summary
• Contract-Frontend Verification

🤝 Contributing

Contributions are welcome! Please feel free to submit a Pull Request.

📄 License

This project is licensed under the ISC License.

⚠️ Disclaimer

This is a testnet deployment for educational and testing purposes only. Do not use with real funds on mainnet without proper auditing and testing.

🔗 Links

• Frontend: http://localhost:3000 (local development)
• Sepolia Etherscan: https://sepolia.etherscan.io
• Pyth Network: https://pyth.network
• LIDO: https://lido.fi

📞 Support

For questions and support, please open an issue in the repository.

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Built with ❤️ for ETH Online Hackathon