Flux

Lending

Flux is a decentralized lending protocol built by the Ondo team. It's core features are forked from Compound V2.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Flux is an overcollateralized lending protocol that is forked from Compound with additional functionality to support both permissionless and permissioned tokens.
What we like less
The protocol only accepts OUSG as collateral which is a permissioned asset controlled by the Ondo team. Only addresses whitelisted by Ondo can mint, transfer, or receive OUSG.
What it means for you
Offers a great way for you to take stablecoin loans against Ondo's tokenized US treasuries collateral.
Information
Exploit/Hacks
None
Info
  • Website
  • Token: ONDO
  • Tags: Lending
Key Metrics
  • TVL: $11.1M (Rank #141)
  • TVL Ranking by Lending: #28
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $11.14M
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; code4rena audited in February 2023
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2023; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 10% by total value locked reduces risk
  • Requires members of a DAO to vote on-chain for approving contract upgrades
  • Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
  • At least one minor governance issue documented
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • Cross-collateral markets are exposed to systemic risks as each asset creates incremental risks for the platform as a whole
  • Basic controls in place to prevent risky borrowing
  • Basic mechanisms in place to incentivize liquidations
  • Solid methods to accrue protocol reserves
Things to know about Flux

How Flux works

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.

How Flux makes money

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.

How you make money on Flux

You earn lending fees on Flux by depositing your idle stablecoins to be borrowed by institutions looking for leverage.