Gobank Whitepaper
What is GoBank (Whitepaper)
I. Introduction
1. Motivation
Traditionally, financial services rely on trusted institutions to process transactions and safeguard value. However, with trustless code execution capabilities, blockchain and smart contracts are challenging this model. Decentralized finance (DeFi) aims to make financial services more open, efficient, and sustainable compared to traditional solutions.
Currently, there are two main approaches to building DeFi platforms: decentralized funds and protocols.
Decentralized funds such as Compound or Aave operate similarly to traditional financial funds but leverage on-chain infrastructure and decentralized governance. While this approach provides liquidity and passive income for users, it also faces trust and scalability issues.
For example, decentralized funds still rely on DAOs (Decentralized Autonomous Organizations) and trusted managers to control underlying assets.
DAOs must monitor multiple risk parameters and manage large smart contracts.
DAOs are not suitable for scalable operations and may become bottlenecks as protocols grow.
High maintenance costs mean these platforms must charge fees to users.
Protocols like Uniswap are trustless smart contracts that execute financial operations completely autonomously. This approach has proven to be highly resilient over time. However, it also has certain drawbacks in terms of user experience.
For example, providing profitable liquidity on UniswapV3 requires active and complex position management.
We propose an approach aligned with the vision that DeFi should be structured in layers around open, trustless protocols, similar to the Internet. On-chain and off-chain applications can be built on minimal DeFi protocols to manage positions, ensure compliance, or enhance user experience.
Depending on their needs, users can delegate certain tasks to different layers, allowing them to maximize efficiency from the network effects surrounding the base protocol while maintaining full control.
A notable example of this model is UniswapX, a platform that simplifies and optimizes trading on UniswapV4, particularly for users who struggle with optimal swap routing and MEV protection.
2. Introduction to GoBank
This paper introduces GoBank, a new trustless and efficient lending protocol that enables permissionless decentralized lending market creation.
GoBank implements simple, immutable, and independent lending markets. Within each market:
Liquidity providers (suppliers) deposit lending tokens into the smart contract.
Borrowers collateralize assets with a maximum Loan-To-Value (LTV) ratio set by the Liquidation Loan-To-Value (LLTV) of the market.
If LTV exceeds LLTV, the account becomes eligible for liquidation.
Asset prices are determined by the market’s oracle.
Interest rates are set based on the Interest Rate Model (IRM) of the market.
Creating a GoBank Market
To create a new market on GoBank, the following parameters must be specified:
Loan token
Collateral token
Price oracle
LLTV (Liquidation Loan-To-Value)
IRM (Interest Rate Model)
Both LLTV and IRM must be chosen from a predefined list governed by GoBank.
Role of GoBank Governance
Markets cannot be halted, and LLTV, IRM, or market oracles cannot be changed once set.
Governance can expand the range of available LLTVs and IRMs to provide users with more options when creating markets.
Governance can apply a fee ranging from 0% to 25% on the total interest paid by borrowers.
II. Decentralized Risk Management
Eliminating DAO risk management bottlenecks is crucial for making DeFi lending more sustainable and scalable.
Limitations of the Current Model
Limited number of supported assets.
Users are locked into a fixed risk-return profile.
A minimalist lending protocol can remove these limitations, but it may also increase complexity for users and fragment liquidity.
How GoBank Solves These Issues
Recreating risk management layers to unify liquidity
GoBank enables the creation of risk management layers, consolidating liquidity and offering passive investment experiences for users who prefer diverse risk profiles.
Reducing oracle risk while utilizing oracles efficiently
GoBank is oracle-agnostic, meaning it does not depend on a fixed oracle but can still use them for optimal asset pricing.
Eliminating "bank run" risks and ensuring continuous operation
GoBank can operate indefinitely without requiring internal management mechanisms, regardless of market conditions.
By externalizing risk management, GoBank creates a sustainable, decentralized, and highly scalable DeFi lending ecosystem.
1. Permissionless Risk Management
GoBank is designed as a foundational layer for decentralized lending, with an immutable structure where governance cannot control user assets.
The protocol allows anyone to create a market with any loan asset, collateral asset, risk parameter, or oracle. For example:
A market could use DAI as the loan asset, WETH as collateral, with LLTV 90% and Chainlink as the oracle.
However, this flexibility can lead to liquidity fragmentation and complexity in risk management, making it difficult for inexperienced lenders.
GoBank’s Solution
Functions as a base platform, allowing additional logic layers to manage risk, compliance, and user experience simplification, especially for passive lenders.
Integrating GoBank into a multi-asset lending model enables the combination of multiple lending markets to recreate a multi-asset lending pool.
For example:
A vault could accept WETH from passive lenders seeking high liquidity and optimized risk management.
A risk expert would allocate deposited funds into suitable GoBank markets.
Example of WETH allocation in a vault:
50% in stETH/WETH market (LLTV 97%, Chainlink, IRM)
50% in cbETH/WETH market (LLTV 95%, Chainlink, IRM)
This approach allows users to benefit from optimizations without needing deep knowledge of risk management.
III. GoBank Protocol Mechanism
GoBank acts as a proxy between users and lending pools. When lenders deposit funds into GoBank, the protocol allocates these assets into lending pools to receive interest-bearing tokens (ibTokens).
Borrowing Mechanism
When a user wants to borrow from GoBank, the protocol uses ibTokens to facilitate the loan.
From this point, both lenders and borrowers benefit from a 100% utilization rate, leading to improved interest rates for both parties.
Matching Borrowers and Lenders
GoBank protocol uses a priority queue mechanism to match users, ranking them based on the amount they want to lend or borrow. When a new lender provides liquidity, their funds are first matched with the largest borrower, followed by the second, third, and so on until the provided liquidity is fully utilized or no borrowers remain.
Similarly, when a new borrower uses GoBank, their demand is fulfilled by the most significant available lender first, then the second, and so forth, until the borrowing request is fully met or no suitable lenders are available.
This whitepaper outlines the foundation of GoBank’s trustless, efficient, and permissionless lending markets. By decentralizing risk management and liquidity, GoBank enhances DeFi lending, providing a scalable and sustainable alternative to traditional financial models.
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