FAQ
Last updated
Last updated
Mystic is a lending market for tokenized real-world assets, which focuses on leveraging the best of RWAs to maximize their use in DeFi. The procol is composed of a main market for core assets, isolated vaults for long-tail assets and a 1-click leverage tool for easy looping.
The mechanisms of TradFi are inefficient and slow, both putting people at risk due to excessive counterparty risk and locking many out of the system due to often misplaced operational and regulatory concerns. In comparison, crypto lending is much cheaper, faster, more secure and transparent for consumers.
It stood out to us that, if we are to bring DeFi lending to the world, we need to have a lending market structured so that off-chain assets can be seamlessly supported, and where borrowers, lenders and underwriters can seamlessly connect with one another. That is what we are building at Mystic.
Current lending markets lack the modularity and support for RWAs to be able to deliver on the above vision. Mystic steps in as an ecosystem where that is not only possible, but which has been purpose-built for this mission.
You can lend and borrow directly via our interface or access our website at To see how to borrow and supply on Mystic, please see our .
Mystic has been built on top of Aave v3.0.1, which has been extensively audited and battle-tested. Its audits may be found . Mystic’s additional changes of protocol permissioning, custodian integrations and vaulting have been audited by auditing firm . See our audits .
5-20% interest rate fees on lending markets operated by Mystic.
5% performance fees on vaults operated by third-parties.
0.05% fee on flash loans.
The health factor is the representation of how much collateral is backing your debt positions, which in turn expresses how close it is to liquidation. It is calculated as:
Liquidation LTV (LLTV) is the point at which a position becomes eligible for liquidation. It is usually slightly higher than the market’s LTV, to give borrowers some room to avoid liquidations. As for how to interpret the HF:
If HF < 1, then the position is eligible for liquidation.
If HF >1, then the position is considered healthy.
Flash loans were first pioneered by Aave, and they let users borrow any amount without collateral, so long as they repay their loan in the same transaction. This is typically used when doing liquidations, leveraging a position or doing arbitrage.
You can do a flash loan by calling the flashLoan function in our smart contracts. Please note the caller contract must have a callback function called executeOperation which returns the amount loaned.
Vaults send their liquidity to sets of pools that all contain the same one borrow asset (e.g. USDC). All vaults are tied to the VaultController, which manages where the assets are allocated. This way, vaults enable creating custom lending value propositions that make it easier for lenders to supply to.
Each pool has its access controls tied to the collateral asset’s legal requirements, which dictate who can participate in the market. Markets can have one of three access levels:
Permissionless: anyone can lend, borrow or liquidate.
Semi-permissioned: only addresses that meet the pool’s requirements via either KYC or whitelisting may borrow or liquidate, whereas lending is permissionless.
Fully permissioned: every participant must meet the pool’s access requirements.
A position is eligible for liquidation when its health factor is equal to or below 1, meaning it has reached the market’s LLTV. When this happens, liquidators repay up to 100% of the position’s debt for a premium by using one the 3 liquidation processes described in .
When a market has a tokenized security as collateral asset, Mystic keeps it with qualified custodians to reduce regulatory risk. In such markets, the assets are sent to Mystic pools first, where and are issued to represent users’ position, before being sent to a custodian for safekeeping. Assets leave the custodian only upon repayment or withdrawal, at which point they are routed to the pool for token management before being returned to the user. The partner custodian for each market can be seen under “Market Info”.