Concepts
Attached are the primatives associated with Quokka Lend.
Last updated
Attached are the primatives associated with Quokka Lend.
Last updated
A liquidity pool in Quokka is a market instance where users can participate as suppliers or borrowers. Each pool is defined by governance-approved parameters, including reserve configurations and collateralization thresholds. Suppliers provide liquidity that borrowers access through overcollateralized positions. In return, suppliers earn interest, while borrowers gain liquidity against their collateral—all facilitated by decentralized smart contracts.
Quokka liquidity pools operate on blockchain networks governed by community decisions that define chain parameters and reserves. These parameters balance liquidity demands with risk management. Smart contracts enforce these rules, seamlessly executing borrowing, repayment, and liquidation processes without intermediaries. This decentralized design ensures transparency, efficiency, and security for all financial interactions within the pool.
Reserve
A reserve in Quokka is an instance of a token within a liquidity pool, governed by a set of parameters designed to manage risk and optimize liquidity. These parameters can vary across markets, even for the same token, enabling Quokka to adapt to different network and pool conditions.
Key Reserve Parameters
Loan-to-Value (LTV): The maximum amount that can be borrowed relative to collateral value. For example, a 75% LTV allows borrowing up to 75% of the collateral’s value. Assets with an LTV of 0% cannot be used as collateral.
Liquidation Threshold: The point at which a position becomes at risk of liquidation. If this threshold is breached, the position may be liquidated to repay the borrower's debt.
Borrowing Enabled: Indicates whether liquidity from a reserve can be borrowed.
Caps: Supply and Borrow caps limit the total amount of a token that can be supplied or borrowed. These caps help manage liquidity and prevent overexposure during market volatility.
Interest Rate Model: Interest rates adjust dynamically based on liquidity pool utilization. As borrowing increases, rates rise to ensure liquidity remains for withdrawals and liquidations. The base rate and slope parameters control these adjustments.
Dynamic Parameters and Governance
Reserve parameters are not fixed and can change over time. Quokka Governance monitors market conditions and adjusts settings accordingly. For example, ETH may have different LTVs or interest rates in the Ethereum and Polygon markets. Governance proposals allow the community to vote on changes, such as raising borrow caps or adjusting LTVs, ensuring reserves stay aligned with current market dynamics. Incentives
Incentives within Quokka encourage active participation from suppliers and borrowers, improving liquidity and protocol efficiency. These incentives can come from multiple sources, including the Quokka DAO treasury and external entities aiming to promote liquidity in specific reserves.
DAO Treasury and Governance
The Quokka DAO, governed by Quokka token holders, can allocate funds from the DAO treasury to incentivize activities within the protocol. These incentive programs are proposed, discussed, and approved through the Quokka Governance process, ensuring transparency and community involvement.
Liquidity Pool Incentives
Incentives can target either the supply or borrow side of liquidity pools, encouraging activity in specific reserves. By rewarding suppliers and borrowers of certain assets, these incentives increase the visibility and adoption of tokens. External incentives also require governance approval.
Approved incentives are distributed over time, proportionate to the liquidity a user supplies or borrows. Users can claim rewards through the protocol’s incentive controller, which manages the allocation and distribution of incentives. This aligns user interests with the health and stability of the Quokka ecosystem.
Safety Module
Quokka holders can stake their tokens in the Safety Module to secure the protocol against shortfalls. In return, they earn rewards, typically in the form of additional Quokka tokens or other incentives approved by governance. These rewards compensate stakers and enhance the protocol's security by maintaining sufficient reserves for potential deficits.
Merit Program
The Merit Program is a periodic airdrop system designed to reward Quokka-aligned behaviors and boost protocol competitiveness. This merkle-tree-based reward system incentivizes users and strengthens Quokka’s ecosystem. More details and the interface to access merit distribution can be found [here].
Oracle
Each reserve in the Quokka Lend is linked to an oracle contract responsible for reporting the market price of assets, which is crucial for determining collateralization requirements.
Oracles are selected through Quokka Governance, creating a decentralized model where the community decides which data sources to use. Once chosen, the oracle submits price feed updates based on its operational logic (e.g., time-based or deviation-based).
Types of Oracles
Aave currently uses two main types of oracle contracts on production markets:
Pyth Price Feeds: Pyth provides reliable, decentralized price data by aggregating information from multiple sources, reducing risks of manipulation or outages.
Correlated Assets Price Oracle (CAPO): CAPO is designed for assets strongly correlated with another asset's price, such as wrapped tokens. It uses specialized logic to mirror the price of the underlying asset. More details on its implementation can be found on [GitHub].
Governance
The Quokka DAO is a decentralized collective of Quokka token holders and contributors working together to shape the protocol's future through a structured governance process. This community-driven model enables participants to propose, discuss, and vote on key changes, ensuring the protocol evolves in line with the collective goals of its members.
Governance Process
Quokka’s governance structure ensures decentralization, security, and adaptability. The proposal lifecycle is designed to allow community members to present, refine, vote on, and implement changes transparently.
Proposal Lifecycle
Governance Forum The process begins with a proposal introduced in the Quokka Governance Forum, where discussions take place and feedback is gathered to refine the idea.
Temp Check (Snapshot Voting) After discussion, a TEMP CHECK vote is conducted on the Quokka Snapshot Space to gauge community sentiment. This informal, non-binding vote helps determine whether the proposal should move forward.
QRFC (Quokka Request for Final Comments) If the Temp Check passes, the proposal moves to QRFC for detailed feedback. This stage includes formal scrutiny, allowing service providers and community members to assess its impact on the protocol. Voting for QRFC also occurs on Snapshot.
QIP (Quokka Improvement Proposal) Once the QRFC passes, the proposal becomes an official QIP, with metadata (stored on IPFS) and a contract payload submitted through Quokka's governance contracts, primarily on Ethereum Mainnet.
Voting After submission, the QIP enters a "Pending" status before moving to "Active" for on-chain voting. Voting is conducted through Quokka governance contracts. For a proposal to succeed, it must meet quorum and vote differential requirements; if not, it fails.
Execution A successful proposal moves to execution, where it is enacted through Quokka’s governance infrastructure. Depending on the proposal type, a timelock delay (1-7 days) is imposed before implementation. Cross-chain proposals are executed via Quokka's Delivery Infrastructure (Q.DI).
Voting Overview
Off-chain Voting (Snapshot): Snapshot is used for non-binding votes in the early stages (Temp Checks and QRFCs). These votes last for three days, allowing token holders to participate without incurring transaction fees.
On-chain Voting (Governance Interfaces): Once a proposal reaches the QIP stage, on-chain voting occurs, using Quokka, stkQuokka, or aQuokka tokens. Voting can occur across multiple networks, and governance interfaces support setting up voting representatives for different networks.
Proposal Frameworks
Quokka has predefined frameworks to simplify the governance process for common proposal types:
Caps Update Framework: Adjusting caps or freezing reserves directly via QIP.
Asset Onboarding Framework: Standardizing the onboarding process for new assets.
New Chain Deployment Framework: Guidelines for deploying Quokka on new blockchains.
Emission Manager Framework: Simplifying the process of adding emission admins to reserves.
These frameworks streamline governance, allowing the community to focus on more complex issues while ensuring the protocol remains secure and adaptable.
Safety Module
Staking in the Quokka Safety Module enables Quokka and ABPT (Underlying Balancer Token Pool) holders on the Ethereum network to contribute to the protocol's security while earning Safety Incentives. By staking, participants add an additional layer of protection but accept the risk that their assets may be slashed in the event of a shortfall to cover any protocol deficits. The following underlying tokens can be supplied to the Safety Module:
Quokka
ABPT (Underlying Balancer Token Pool)
Safety Incentives are rewards distributed to participants who stake their assets in the Quokka Safety Module. These rewards compensate stakers for the risk they take, as their assets could be slashed to cover protocol deficits in case of a shortfall. The incentives are primarily distributed in the form of Quokka tokens, and the allocation amount is determined by Quokka Governance through votes on emission parameters.
The emission parameters, which dictate the rate of Safety Incentives, are voted on by the Quokka DAO. These parameters are allocated from the Ecosystem Reserve (Quokka Tokens) and/or the Protocol Treasury. Governance votes allow Quokka token holders to influence how much of the reserve or treasury is allocated to incentives and how they are distributed over time. This decentralized decision-making process ensures that incentives align with the overall health and security of the Aave ecosystem.
Safety Incentives accumulate over time and can be claimed at any point while tokens are staked or after un-staking from the Safety Module.
Staking in the Quokka Safety Module involves potential slashing risks. Slashing refers to the reduction of staked assets in the event of a shortfall within the Quokka Lend. This mechanism is used to protect the protocol by utilizing a portion of staked assets to cover any deficits. While staking provides rewards through Safety Incentives, there is a risk that a portion of the staked assets could be slashed to help stabilize the Quokka ecosystem.
The extent of slashing varies depending on the type of token staked:
stkQuokka and stkABPT: Maximum slashing risk is up to 30% of staked assets.
These slashing risks are an essential consideration for anyone looking to participate in the Quokka Safety Module, as they reflect the potential loss of assets in exchange for contributing to the protocol’s security. Slashing events are triggered and executed through onchain Quokka Governance proposals.
Quokka
The Quokka token is the native governance token of the Quokka Lend, enabling holders to actively participate in the protocol's decision-making process. Quokka is an ERC-20 token deployed on Morph blockchain and is widely accessible on both centralized and decentralized exchanges.
Quokka token holders can influence the future direction of the Quokka Lend through governance. Both Quokka and safety module staked Quokka (stkQuokka) holders are empowered to vote on proposals or delegate their voting power to others. By participating in governance, holders contribute to decisions on protocol deployments, parameter adjustments, new features, and other critical changes.
Quokka tokens can be supplied to liquidity pools within the Quokka Lend or external decentralized exchanges, allowing users to earn yield.
Holders can also stake their Quokka tokens in the Quokka Safety Module, helping to secure the protocol by providing a backstop in case of insolvency, while earning rewards. Additionally, Quokka tokens can be supplied as collateral in Quokka markets, enabling users to borrow other assets and increase their capital efficiency.
Quokka has cross-chain implementation across multiple networks using canonical network messaging bridges. This allows users to access Quokka across various blockchain networks. However, the ability to bridge tokens to and from Morph depends on the availability of the network bridge.
