Neptune’s story began in May 2021 as an integration for leveraged vault strategies. Following the events in May 2022, Neptune started building an advanced money market.
What is Neptune Finance?
Neptune Finance is a collateral-based lending and borrowing platform built using Rust and the Cosmos SDK, a development kit designed for interoperable networks.
Using Neptune, lenders can earn Interest lending to borrowers who provide collateral to secure their loans. Lenders earn based on their share of the interest paid by borrowers, less any protocol fees.
To use the protocol you need a Supported Wallet (Keplr, Metamask) and the Gas Token (INJ) for transaction fees. Then connect to the Injective Blockchain with your wallet and head to the Neptune app button at nept.finance.
Gas Token
The Neptune protocol requires a small amount of the Gas Token (INJ) to use the network (see how to get INJ).
Supported Assets
Only whitelisted assets are approved to lend and borrow, and/or use as collateral.
Supported Networks
Neptune is available on the Injective testnet network.
Users can deposit assets to Lend and earn a share of the Interest that borrowers generate. Once an asset is deposited to the lending market, users receive nTokens.
Lend
Users can deposit assets to Lend and earn a share of the Interest that borrowers generate. Once an asset is deposited to the lending market, users receive nTokens.
nTokens
nTokens are used to claim the lender’s tokens from the lending pool plus the interest accrued. The issuance of nTokens allow depositors to lend while retaining the ability to use the asset as Collateral.
Borrow
A user can open an Account by providing Collateral. Once an account has collateral, the user can Borrow.
Borrowers pay Interest for the duration of the loan (exception: Flash Loans).
Collateral
Collateral is used to help ensure debts are repaid.
Collateral assets can be volatile. It is the responsibility of the borrower to ensure their account’s collateral can maintain the value of the debt. If a borrower’s Account Health falls below 1.0, a partial Liquidation should be expected for that account. Since each account is separated, a liquidation for one account will not affect other accounts.
Each collateral has a Max LTV that is used when opening a position. Each new collateral asset added must be approved by governance (see Token Listing Framework). Token values are determined using a multi-source Price Oracle.
Max LTV
The Max LTV is the maximum loan value that each collateral asset can borrow. For example, if an account has $100 value of INJ with a Max LTV of 80% then the account can borrow up to $80 value of other market tokens.
Borrowing is done through Accounts. Each account is a separate borrow position with its own Account Health. This means one Supported Wallet can have multiple borrow positions.
Account Health
Account Health measures an account’s proximity to a Liquidation.
An account can be liquidated when it reaches an account health below 1.0. When an account becomes unhealthy, debts are repaid by liquidators and collateral is taken until the account reaches its Target Liquidation Health. Accounts with collateral that do not meet the Partial Liquidation Threshold may be entirely liquidated. To improve account health, a borrower can repay debt or add collateral.
Cross Margin
An account that uses multiple assets as Collateral is a Cross Margin account. Using a mix of collateral assets can help limit the impact of price volatility on one asset that could cause a liquidation event.
Isolated Margin
An account that uses one asset as collateral is an Isolated Margin account. Using only one asset as collateral can be useful for borrowers looking to maximise exposure to one asset in that account.
Liquidations
Liquidation is the process of taking a borrower's Collateral to repay their debts.
Liquidators play an important role in keeping the money market solvent by repaying an Account's debt when it falls below an Account Health of 1.0.
Partial Liquidation Threshold
The Partial Liquidation Threshold is a value that allows small accounts to be liquidated entirely, even if the liquidation brings the account health above its Target Liquidation Health.
Dynamic Liquidation Premiums
To encourage competition among liquidators, Neptune has introduced Dynamic Liquidation Premiums that vary between a MIN and MAX for each collateral asset.
When account health falls below 1.0, a dynamic premium creates competition among searchers to liquidate accounts quickly and at the lowest cost to the borrower. However, if an account’s health continues to drop, a dynamic premium increases the profit potential for liquidators and helps mitigate bad debt Risk.
Liquidators
Liquidators follow an automated process of paying down an unhealthy account's borrowed funds. In this process, liquidators repay the account's debt until the account is brought back to its Target Liquidation Health. The liquidation process is permissionless so anyone can participate.
Liquidators are advised to review the Developer Docs.
Target Liquidation Health
The Target Liquidation Health is a variable that determines the maximum value of debt that can be repaid in one liquidation event. At launch, this parameter is set to 1.02.
Advanced Features are functions that are subject to change and may or may not be released. This is not an exhaustive feature list as many additional features have yet to be announced. Features may be subject to change.
Collateral Swap
Collateral Swaps allow users to swap out Collateral tokens that are locked in contracts.
Collateral Swaps are used when a user wishes to change their Account’s collateral without first repaying the loan or providing additional collateral to the account. For instance, a user may reduce risk by adding new uncorrelated assets, removing undesirable exposure, or taking profits when Collateral assets appreciate. Inversely, a user may increase risk by removing low volatility assets in exchange for more volatile assets when anticipating positive market movements.
This feature uses whitelisted DEXs to swap between accepted collateral assets.
Flash Loans
Flash Loans are uncollateralized debts that are paid back within the same transaction.
The use of flash loans are considered safe to the protocol because flash loan debt, plus a fee, is repaid in the same block it was issued. Typically, flash loans are used to participate in a market opportunity where access to large amounts of liquidity is required, such as for Liquidators to repay debt for one or more accounts in a single block. Overall, this can create a more robust liquidation market.
Gasless Swaps
Gasless Swaps provide gas tokens for transferring assets between IBC-compatible chains.
This allows a user to IBC-transfer assets from Chain-A to Chain-B seamlessly while a portion of the transferred asset is swapped for the gas token needed to conduct the operation.
Gasless Swaps are only available for assets with this feature enabled.
Neptune Vaults
Neptune Vaults are automated smart contract strategies that borrow tokens to invest.
Vaults automatically open a borrow position and engage in a specific investment strategy that, typically, are only available for skilled developers to program.
Overleverage
Overleverage is an automated function for borrowers to maximise their exposure by borrowing an asset, swapping that asset on a DEX for another token, and depositing that as collateral. Through this process, a borrower can achieve leverage up to 5x the value of the supplied collateral when borrowing a token with 80% Max LTV.
Contribute and help determine the future of the project.
Non-technical contributions
Community support,
Marketing and promotion,
Design and video creation,
Education and onboarding materials.
Technical contributions
3rd party integrations,
Live analytics for platform health,
Public tools and raw data support,
Participation in bug bounties.
Contributions that require high running costs can request assistance from the Community Fund. Only in special circumstances should the community fund be used to pay for services or to provide incentives for certain actions.
Follow Neptune Finance
Neptune is devoted to building an excellent product and user experience for DeFi users and developers. Follow the Neptune project and join the community.
https://nept.finance