The Credit Order Book (COB) is the central primitive of the Loopscale Protocol and acts as a matching engine to facilitate the efficient pairing of borrowers and lenders across various rates, durations, and collateral types.

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Virtual Markets

Most users interact with the Loopscale protocol via the Loopscale App where orders are standardized for simplicity. On the Loopscale App, Lenders place limit orders and borrowers place market orders. Most parameters listed in Order Parameters are abstracted away with global presets (see Asset Parameters for any defined global values). On the Loopscale App, orders may specify:
  • Principal
  • Collateral
  • Interest Rate
  • Duration
Rather than placing individual orders on every market, lenders create rulesets defining the bounds of accpeted terms. This ruleset is abstracted into Virtual Markets which are filtered views of market liquidity defined by:
  • Principal asset (e.g. USDC)
  • Collateral asset (e.g. mSOL)
  • Loan duration (e.g. 30 days)
Borrowers interact with these simplified markets, while under the hood, the protocol supports full composability. Virtual Markets concentrate liquidity around standardized, popular configurations and support incremental refinement over time, enabling more granular markets as overall liquidity increases.

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Matching

The Credit Order Book employs a matching engine to pair loan offers with loan requests. If an offer and request match across loan terms, the borrower may fill the lender offer, and initialize the loan. On the Loopscale App, borrowers instead fill lender offers directly with matching collateral without creating a request. Borrower will fill the best-available order on the COB as determined by the interest rate.

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Execution

When a compatible lend order is matched or otherwise filled:
  • The lender’s capital is transferred to the borrower
  • The borrower’s collateral is escrowed
  • A repayment ledger is initialized to track terms and repayments
The protocol programmatically manages the loan via the repayment ledger, which handles activities such as interest accrual and liquidation of unhealth positions.