FLEXILOAN Protocol

Non-Locking Liquidity Provision for DeFi

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📌 Overview

Traditional DeFi protocols (like Aave or Compound) require users to lock their funds into pools. Users receive receipt tokens but lose direct control of their assets. Pools are also inefficient — typically, only ~30% of the funds are actively used, while the rest sit idle.

FLEXILOAN Protocol changes this model. Liquidity Providers (LPs) do not stake or deposit their funds. Instead, they simply approve tokens (e.g., WSTT) for the protocol. Tokens remain in their own wallets (EOAs), yet they earn rewards when the liquidity is used for flashloans.

This ensures capital efficiency, full user control, and flexible participation in DeFi liquidity.

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✨ Features

• No Locking → Users keep tokens in their own wallets.
• Fair LP Rotation → Queue mechanism ensures equal chances for LPs.
• Flashloans Made Simple → Instant liquidity access for developers and protocols.
• Capital Efficiency → Idle liquidity earns rewards without restrictions.
• Edge-Case Safe → All error scenarios handled (insufficient approvals, partial fills, borrower failure, etc.).

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🔄 How It Works (Stepwise)

1. User Opt-In

• User grants ERC-20 approve to FLEXILOAN contract for their tokens (e.g., WSTT).
• Tokens remain in the user’s wallet — no deposits, no staking.

2. LP Queue Registration

• Protocol records the LP in a queue with their approved amount.
• Queue ensures fair rotation: LPs move to the back once their liquidity is used.

3. Borrower Requests Flashloan

• A smart contract requests liquidity via FLEXILOAN’s flashLoan function.
• UI does not handle receiver logic — borrowers implement their own strategy (see Docs & video).

4. Liquidity Allocation

• Protocol pulls approved liquidity (transferFrom) from LPs in queue order.
• Iteration continues until the requested amount is satisfied.
• Used LPs are rotated to the back of the queue.

5. Loan Execution

• Borrower contract executes its custom logic with borrowed funds.
• Principal + fee must be returned within the same transaction.
• If not, the entire transaction reverts — LPs stay safe.

6. Fund Return & Reward Distribution

• Once loan completes, returned funds + rewards are distributed back to LPs.
• LPs immediately see their funds + extra rewards back in their wallet.

7. Post-Iteration Updates

• Queue order is updated.
• Approvals are adjusted for partially used LPs.
• LPs remain free to use or revoke their tokens anytime.

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🔐 Safety & Edge Cases

• Insufficient Approval → skipped/partially used LPs.
• Partial Fill → unused approvals remain active.
• Atomicity → borrower failure reverts everything, protecting LPs.
• Reentrancy Protection → standard security guards applied.
• Fair Rotation → prevents one LP from being overused.
• Gas Safety → iteration caps protect against gas exhaustion.

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📍 Deployment on Somnia

• WSTT Token: 0xF22eF0085f6511f70b01a68F360dCc56261F768a
• FLEXILOAN WSTT Pool: 0xe83168C582d043D0938CF611FbB4d012225eDC76

(Links point to Somnia block explorer — replace with correct explorer URL if available)

📖 Documentation

• Flashloan receivers must be smart contracts.
• UI does not simulate borrower logic.
• For integration details and sample receiver contracts → see Docs Page.