Flux is a decentralized lending protocol built by the Ondo team. It's core features are forked from Compound V2.
Flux is an overcollateralized lending protocol that is forked from Compound and developed by the Ondo team. Flux was designed to complement Ondo's tokenized products as OUSG is the only collateral asset to lend other stablecoins (OUSD cannot be borrowed). Flux consists of a decentralized system of lending pools. Users deposit assets they want to lend into a liquidity pool and borrowers draw from the pool when they want to take out a loan. Flux borrowers must first supply assets before they can borrow. Given the high volatility of crypto assets, borrowers must post more collateral than the value of the loan, or referred to as overcollateralization. Interest rates on Flux are driven by market supply and demand. To facilitate this activity, Flux issues fTokens to lenders that reflect accruing interest on the underlying token.
Flux allocates a portion of the interest paid to borrowers to its reserve, which acts as insurance and is controlled by ONDO token holders. Each supported asset has a reserve factor that determines how much goes into the reserve. Reserves (controlled by ONDO holders) help backstop the system by acting as liquidity in each market to cover any bad debt in case of borrower default and liquidation malfunction.
You earn lending fees on Flux by depositing your idle stablecoins to be borrowed by institutions looking for leverage.