Supply & Borrow

How the supply and borrow mechanics work under the hood — from ERC-4626 vault shares to scaled debt tracking.

Supply Flow (Lenders)

Approve stablecoin

One-time USDC (Polygon) or USDT (BSC) approval to the VarlaPool contract.

Call deposit()

Deposit stablecoins into the ERC-4626 vault. You receive vault shares proportional to your deposit relative to total pool assets.

Earn yield

As borrowers pay interest, the vault's total assets grow. Your shares represent a growing claim on the pool — no staking or claiming needed.

Withdraw anytime

Call withdraw() or redeem() to convert shares back to stablecoins. Subject to available liquidity.

VarlaPool implements the ERC-4626 tokenized vault standard. Shares are transferable ERC-20 tokens — you can hold, transfer, or integrate them into other protocols.

Borrow Flow (Borrowers)

Approve ERC-1155 positions

One-time setApprovalForAll to allow VarlaCore to transfer your prediction market positions.

Deposit collateral

Transfer ERC-1155 PM positions into VarlaCore. Multiple positions can be deposited into one account (cross-margin).

Call borrow()

Borrow stablecoins up to your weighted LTV limit. The oracle prices each position and applies the appropriate risk tier LTV.

Interest accrues

Debt grows per-second via a global borrow index. No manual compounding — the index tracks cumulative interest automatically.

Scaled Debt Tracking

Varla uses a global borrow index to track interest efficiently. Instead of updating every borrower's balance, the protocol stores a "scaled" debt amount and multiplies by the current index to get the actual debt.

actualDebt = scaledDebt × borrowIndex

// When you borrow $1,000 at index 1.05:
scaledDebt = 1000 / 1.05 = 952.38

// Later when index reaches 1.10:
actualDebt = 952.38 × 1.10 = $1,047.62
// You owe $47.62 in interest

Collateral Valuation

Each deposited position is valued using the conservative oracle price — min(spot, TWAP) — then multiplied by the position's risk-tier LTV to determine borrowing capacity.

maxBorrow = Σ (positionValue × tierLTV)

Example:
├── Position A: $5,000 × 80% = $4,000
├── Position B: $3,000 × 65% = $1,950
└── Position C: $2,000 × 50% = $1,000
────────────────────────────────────────
Total max borrow:              $6,950

Key Parameters

Parameter	Value	Notes
Min deposit	No minimum	Gas cost is the practical floor
Max borrow	Weighted LTV limit	Per-account, cross-margin
Interest model	Kinked curve	See Interest Rates
Reserve factor	10%	Of borrower interest
Vault standard	ERC-4626	Fully composable