Cheese Bank White Paper 2.0
This white paper explains the Cheese financial protocol built on the Ethereum blockchain in a reader-friendly way. Technically savvy readers can go on to the "Cheese Contract" to learn further.
Cheese Bank
Version 2.0
October 2020
Preface
So far, the decentralized technology has almost realized the ideal of "code as law" based on the concept of open and inclusive, the characteristic of transparency, openness, censorship, and unforgeability. Innovative protocols such as Maker Dao, Compound, AAVE, UniSwap have brought countless investment feast for the pioneers in this field. However, there are still some previously neglected links in the gradually enriched DeFi ecology, such as how to improve the asset utilization rate, how to make the LP tokens created by AMM obtain more usage scenarios, and how to connect the real assets to the DeFi world…Based on the above thinking, Cheese Bank came into being.

1 Cheese Bank——Cheese for everyone

Cheese Bank is a decentralized autonomous digital bank based on a decentralized protocol on Ethereum which helps digital currency investors to manage asset, including lending, fund management, insurance services and so forth. We will start with some innovative functions from DeFi lending, gradually launching digital funds, insurance and other businesses. In the future, we will issue S series exclusive token with digital banks who have legal financial license, which will make Cheese Bank become a bridge between physical assets and the DeFi world. In addition, unlike other existing DeFi projects, Cheese Bank is a completely decentralized one. The team does not own any initial tokens, and the community will jointly implement voting governance in the future.
*This white paper explains the Cheese financial protocol built on the Ethereum blockchain in a reader-friendly way. Technically savvy readers can go on to the "Cheese Contract" to learn further of the entire open source system.

2 Lending Service

2.1 Overview of DeFi Lending

US$3.92 billion have been locked in the DeFi Lending agreement as of 1st, September 2020 (Data from: Defipulse.com). There are several DeFi agreements so called "lending agreements" currently, and they both have their own unique characteristics. Despite the differences between them, they all rely on the same basic mechanism to function: over-collateralization and liquidation. Like depositing money in a bank account, the user needs to provide the asset as collateral to the agreement, however, no third party has the power of custody, users always maintain controlling.
Users who deposit assets to the agreement can borrow other assets from the agreement, but there is a limitation that the total value of the borrowed assets that is always less than the total value of the deposited assets. Since the users always have to provide more collateral value than they can borrow, their positions are so called over-collateralized.
Over-collateralization requires a large amount of funds to be deposited, which is not conducive to the circulation of assets.The existing lending agreement, lending pool and collateral are created and designated by the project party, other choices are limited, which is also not conducive to the circulation of more types of assets.On account of the disadvantages mentioned, the development of DeFi lending is severely limited.
Cheese hopes to break the blocks of the existing DeFi lending platform by revolutionary mechanism. DeFi Lending won't stop moving, the innovative lending platform of Cheese Bank is creating brand-new miracle.

2.2 Cheese Lending Agreement

Cheese Lending Agreement is a real-time settlement accounting book using smart contract. The premise that the accounting book can settle in real time is that the transactions occur one by one in certain execution order, and the transaction time is true and reliable.
Blockchain meets the premise mentioned that can provide the productivity for existing lending platforms, such as AAVE and Compound.
Cheese Lending Agreement hopes to develop further comprehensive and in-depth financial lending business in a decentralized way, and add more types of collateral.
  • Phase Ⅰ, start deposit-farming (Cheese support both "single currency" and "LP tokens" to deposit ) and give a warm welcome with generous Cheese token incentives to appeal more community members ;
  • Phase Ⅱ, launch the lending service and innovative the liquidity pool (LP) token collateral mechanism. The LP token of each platform can be used as collateral in Cheese Lending Service. The LP token collateral mechanism is innovated and improved to promote the circulation of asset, so as to greatly improve the asset utilization rate;
  • Phase Ⅲ, launch the mechanism of lending liquidity pool customization- just like Alibaba in the field of DeFi lending, everyone can freely customize the lending liquidity pool and take what they need; launch the mechanism of mortgage in freedom - users with cheese token can freely choose and participate in the lending of any asset, and according to the consensus of community, the mortgage rules of the lending liquidity pool can be freely designed. Community dominates the whole lending liquidity pool, and truly realize the goal that any asset can be mortgaged and borrowed to promote the circulation of more currencies. Furthermore, realistic high-quality assets can be mortgage in Cheese Bank.
Traditional Lending Protocol (eg.Compound)
VS
Cheese Lending Protocol
Just like Amazon in Internet e-commerce;
Official creates lending pool, user choice is limited
Concept
like Alibaba in the field of DeFi lending;
everyone can freely customize the lending liquidity pool and take what they need
only support common digital assets, such as ETH、USDT、DAI etc.
Collateral
mortgage in freedom, freely choose and participate in the lending of any asset
the LP token collateral
(1)Deposit interest and borrow interest
(2)Yield-farming income
Interest
(1)Deposit interest and borrow interest
(2)Yield-farming income
(3)The LP token collateral mechanism,greatly improve the asset utilization rate
(4)Earn compound income in other service of Cheese Bank, such as insurance, fund and etc.
Team reservation
Distribution
No pre-mining, no founder reservation, community owns all

2.3 Interest Rate Model

Cheese protocol model is extended from the Compound protocol,Rather than individual suppliers or borrowers having to negotiate over terms and rates, the Cheese protocol utilizes an interest rate model that achieves an interest rate equilibrium, in each money market, based on supply and demand. Following economic theory, interest rates (the “price” of money) should increase as a function of demand; when demand is low, interest rates should be low, and vise versa when demand is high. The utilization ratio U for each market a unifies supply and demand into a single variable:
Ua=Borrowsa/(Casha+Borrowsa)U_{a}= Borrows_{a} / (Cash_{a} + Borrows_{a})
The demand curve is codified through governance and is expressed as a function of utilization. As an example, borrowing interest rates may resemble the following:
Ua=Borrowsa/(Casha+Borrowsa)U_{a}= Borrows_{a} / (Cash_{a} + Borrows_{a})
The interest rate earned by suppliers is implicit , and is equal to the borrowing interest rate, multiplied by the utilization rate.
Each time a transaction occurs, the Interest Rate Index for the asset is updated to compound the interest since the prior index, using the interest for the period, denominated by r * t, calculated using a per-block interest rate:
Indexa,n=Indexa,(n1)(1+rt)Index_{{a,n}} = Index_{{a,(n-1)}} * (1 + r * t)
The market’s total borrowing outstanding is updated to include interest accrued since the last index:
totalBorrowBalancean=totalBorrowBalancea(n1)(1+rt) totalBorrowBalance_{{an}} = totalBorrowBalance_{{a(n-1)}} * (1 + r * t)
And a portion of the accrued interest is retained (set aside) as reserves, determined by a
reserveFactor , ranging from 0 to 1:
reservesa=reservesa,(n1)+totalBorrowBalancea,(n1)(rtreserveFactor) reserves_{{a}} = reserves_{{a,(n-1)}} + totalBorrowBalance_{{a,(n-1)}} *(r * t * reserveFactor)

2.4 Lending Service

2.4.1 Basic Service

The Cheese Lending Protocol 2.0 version will officially launch the lending service. Users can select supply or borrow services on Cheese Bank’s lending platform. Cheese Bank will wholeheartedly provide you supply/borrow APY that are superior to other lending platforms. At present, users can supply: ETH, USDT, USDC, DAI and their corresponding UniSwap liquidity pool tokens, as well as Cheese UniSwap liquidity pool token; users can borrow: ETH, USDT, USDC, DAI.
*Please pay attention that a same account should not both supply and borrow the same currency.
*The listing of more currencies will be determined by the community after the community governance is improved.

2.4.2 Launch the liquidity pool (LP) token as collateral mechanism.

Cheese bank launch the innovative liquidity pool (LP) token as collateral mechanism. Users can use other DEX's Liquidity Pool Tokens as collateral for borrowing on Cheese Bank (currently only support UniSwap) . This will not only enrich mortgage mode to make the whole market get better liquidity, and give full play to the value of assets.
Asset
LTV
Basic Interest Rate
ETH
75%
3%
DAI
75%
3%
USDC
75%
3%
USDT
75%
3%
UNI_V2-ETH-USDT
87.5%
UNI_V2-ETH-USDC
87.5%
UNI_V2-ETH-DAI
87.5%
UNI_V2-ETH-CHEESE
60%
*Users should be careful about the borrow limited, which may subject the asset to being seized in liquidation.
*Interest Rate will fluctuate according to the market change.

2.5 Detailed rules of issuing token

2.5.1 Cheese Token

The token "Cheese" is issued by Cheese lending protocol which was belonging to decentralize digital Cheese Bank, and the total circulation is 10 million.It is a decentralized ERC-20 blockchain digital asset issued on Ethereum.

2.5.2 Distribution

All participants in the ecological development of cheese lending protocol are contributors, therefore, we decided to hand over the development of cheese lending to the community. The team has no reservation, no pre-mining and no team allocation, so that the consensus of Defi can be implemented more thoroughly.
Proportion
Number
Allocation scheme
100%
10 million
Completely owned by the community
Phase I:2020.09.30——2020.10.15(UTC+0)15 Days
The first stage of the project is the initial stage of community construction. In order to let more users understand and participate in the construction of cheese community, more incentive cheese tokens will be released ——200,000 cheese tokens released per day. A total of 3 million tokens will be released.
Phase II:2020.10.15——2021.01.23(UTC+0)100 days
In the second stage of the project, the lending service will be gradually launched, and the system will readjust the reward for the release of cheese token, 20,000 cheese tokens will be released every day. A total of 2 million tokens will be released.
Phase III:Begin at 2021.01.23
In the third phase of the project, the system will adjust the reward for the release of cheese tokens again. A total of 5 million tokens will be released.
*Due to the time difference and the slight change of ETH network block-time, the specific time shall be subject to the actual release.

3 Planning

3.1 Asset-management services

As the first decentralized digital bank, cheese will gradually open up its asset management service. After participating in the exchange of cheese series tokens, users can choose the asset management investment service. Cheese will find the best financing way (automatically select the income aggregator that can obtain the highest yield, siphon the value of various blockchain products), so that your funds can be lossless in this case, the revenue can be maximized.

3.2 Insurance services

Cheese insurance is a kind of basic financial protection insurance under Dao self-organizing smart contract. With the continuous development of the project, the gain-type insurance business will be launched at the right time.

3.3 Fund issuance services

In order to meet the diversified investment needs of investors, Cheese will issue its own investment fund in the future, which integrates the protocol smart contract system, makes quantitative investment in digital currency, obtains stable and transparent income, operates according to the strategy encoded in the smart contract, and regularly rebalances its portfolio, and will cooperate with more professional investment teams for all communities Household services.

3.4 sToken Plan

Cheese will launch the S-series token program. S-series token is a composite asset generated by cheese protocol on Ethereum, which anchors the prices of other mainstream assets in the public chain, and tracks the prices of its corresponding real assets. For example, sBTC, sETH, and etc., not only facilitate users to make more diversified investment in the ETH public chain, but also provide more derivative financial services for cheese community users.

4 Risk tips and Disclaimers

4.1 Disclaimers

This document is only used to convey information and does not constitute an opinion on the sale of cheese token. The above information or analysis does not constitute investment decisions and specific suggestions. This document does not constitute any investment advice, investment intention or solicitation of investment in the form of securities. This document does not constitute or be understood as offering any trading or inviting to buy or sell any form of securities, nor is it any form of contract or promise. Users should carefully understand the risks of the development of the project and bear all the corresponding results or consequences.

4.2 Risk tips

The cheese team attaches great importance to security, so we have been reviewing and constantly modifying and improving Cheese. The funds will be stored in an unmanaged smart contract on the Ethereum blockchain. You can freely control your assets in your wallet. Code can also be used to monitor and audit. However, DeFi is a new decentralized concept. All smart contracts, whether they are audited or not, are at risk of being attacked by hackers. Please assess the security risks yourself and participate in the cheese financial protocol.

5 Summary

The charm of DeFi lies in consensus and autonomy. Every blockchain project is trying to use the token issued by itself as an economic incentive tool to promote the spontaneous cooperation of various roles in the ecosystem. Therefore, a perfect consensus between the token economic system and the community is the prerequisite for the success of a project. We are looking for everyone and every role in the deFi ecosystem to work for the community as much as possible.
Every wave of science and technology will lead mankind to a freer, more equal and better coast. We are honored to participate and proudly invite you to work together to create a brilliant era of DeFi.
Last modified 1yr ago