Integration with Iron Bank
To enable our users to take leverage on many assets without having to bootstrap liquidity for all of them ourselves, we are partnering and integrating deeply with Iron Bank or Cream V2 as a source of liquidity. This enables Homora V2 to quickly grow and scale.
Homora V2 and Iron Bank contracts are integrated and interoperated at a deep level that has never been done before in DeFi. This is the first time that a contract (Homora V2) can borrow from a lending protocol (Iron Bank) in an under-collateralized way. Homora V2 will borrow liquidity from Iron Bank and offer as leverage for our users. Thus, Cream users will also benefit from higher lending interest rates. On the other hand, the lending assets are also lent on Iron Bank.
As mentioned above that a contract (Homora V2) borrows from a lending protocol (Iron Bank) in an under-collateralized way, there is a credit limit set between Homora V2 and Ironbank to ensure protocol's security.
The term credit limit refers to the maximum amount of credit for each asset Ironbank extends to Homora V2 to be used as an additional borrowing fund when users open any leveraged yield farming position on Homora V2.
As a result, a situation where there is enough liquidity within each supply pool but users are not able to borrow more asset may occur. However, we have an internal monitoring system to monitor changes in credit limit and actively increase when the credit limit reaches a certain threshold to support our users.