X-Talk Fungible Token Lending and Borrowing

The ability to lend a Fungible Token on Chain A and borrow the Fungible Token on Chain B. Both chains may be EVM or Non-EVM compatible blockchain networks. The source token will automatically be locked on Chain A and the equivalent destination token will be minted on Chain B. This allows the Fungible Token to be lent on one platform and used as collateral to borrow Fungible Tokens on any other platform for various purposes.

Example:

The ability to lend a fungible token on Avalanche and borrow Fungible Tokens on Solana. The source fungible token will be lent, and the destination fungible token would be borrowed. The token will be usable on the destination chain for transaction fees, staking, governance, and trading.

Technical Workflow

Figure 18 X-Talk Fungible Token Lending and Borrowing Workflow

Workflow explained

1. User deposits Fungible Token to the L1X MultiSig smart contract on the Avalanche Blockchain. L1X MultiSig Smart Contract sends these tokens to the L1X Liquidity Pool.

2. User initiates the Smart Contract on the L1X Chain that makes the Execution Manager ready in terms of listening to the MultiSig contract initiation events.

3. Execution Manager informs the Rule Engine about Transaction Type. In this use case, it’s ‘L1X_LendBorrow’.

4. Rule Engine verifies the event and forwards it to the Rule Processor.

5. Rule Processor filters and sends relevant information to the Rule Database.

6. Rule Database gives the response for the associated function call.

7. Rule Engine sends an event for an empty struct to the Execution Manager with function/rules and its relevant variable/function parameter details.

8. The Execution Manager requests the Execution Register to store the information about Fungible Token deposited to the MultiSig.

9. Execution Register stores the event information and informs Execution Manager.

10. Execution Manager invokes L1X MultiSig Smart Contract on the Solana blockchain network for the L1X Liquidity Pool to transfer FT to the destination address.

11. Event is triggered once FT is successfully transferred to the destination address on the Solana blockchain.

12. Rule Engine sends the corresponding event for the transaction struct to the Execution Manager.

13. The Execution Manager provides information about successful FT borrowing on the Solana network to Execution Register.

14. Execution Register stores the information and updates the Execution Manager.

15. User is informed about successful FT lending on Avalanche and borrowing on Solana.