oracle noun
someone who knows a lot about a subject and can give good advice ~ Cambridge English Dictionary
On Clearpool, market forces of supply and demand drive not only the size of single-borrower liquidity pools but also the interest rates paid by borrowers and earned by lenders.
At the center lies a unique and innovative interest rate curve. Developed by the Clearpool team and implemented in July 2022, this curve is designed to incentivize borrowers to optimally utilize liquidity in their pools, ensuring capital efficiency whilst compensating lenders appropriately with risk-adjusted returns. With a distinctive “U-shape,” it is derived from a formula which uses the cosine trigonometric function.
Three key parameters within the formula contribute to the overall “shape” of the curve, determining in turn the interest rates for borrowers and lenders in permissionless pools. These parameters are referred to as Y0, the interest rate corresponding to 0% utilization of pool liquidity by borrowers; Y1, the interest rate corresponding to 100% utilization of pool liquidity by borrowers; and Ym, the lowest interest rate along the curve that borrowers can pay.
To ensure that the interest rate curves applied to permissionless pools move fluidly with changing market conditions, it is necessary to introduce a mechanism that — as with the supply and demand of liquidity in the pools themselves — is driven by the forces of the market.
Clearpool Oracles provide this mechanism.
Composed of institutional market participants, the Clearpool Oracle network votes on the three parameters — Y0, Y1 and Ym — in line with their assessment of current market pricing. At the end of each voting epoch, the distribution of Oracle votes is processed mathematically, resulting in a weighted average data point which is subsequently used to price the respective parameter for the duration of the following epoch.
The outcome of this process ensures that, at the conclusion of each epoch, the interest rate curve is re-priced — or “re-shaped” — to reflect current market conditions as prescribed by the consensus data points submitted by Oracles.
How does this relate to CPOOL Staking?
In order to ensure that the Oracle mechanism produces fair and accurate data points, the mathematical formula used to process the votes removes outliers beyond the 25th-75th percentiles. Only those data points within range are used to calculate the weighted average. If an Oracle’s vote falls outside of this range, the vote is ignored and the Oracle rendered ineligible for rewards. Oracle’s whose votes fall within the range earn CPOOL emissions.
As a CPOOL holder, you are able to stake your tokens to an Oracle’s Staking Pool. This increases the weight and voting power of that Oracle. The higher the weight, the more emissions (capped at 10% of total CPOOL staked) that Oracle can earn for providing a successful data point in the voting process.
The emissions that are earned with your CPOOL weight will accrue to you as your staking yield, minus the Oracle commission, a percentage amount which is set individually by each Oracle. The commission is what the Oracle charges for voting successfully with your CPOOL weight.
The yield that you will earn through staking depends on a number of factors, including the voting success of the Oracle, the voting power (weight) of the Oracle and the Oracle commission. All of these factors, including the current APR for each Oracle pool, can be observed on the staking page. Please be aware that these factors will not be visible until staking launches on 10 October and will be subject to subsequent fluctuations depending on the change in the aforementioned factors over each epoch.
By staking with an Oracle, you will be helping to secure the interest rate pricing mechanism, as Oracles are incentivized to provide successful submissions in order to attract more staked CPOOL and therefore increase their capacity to farm proportionately higher emission rewards.
Who can be an Oracle?
Initially, the team is inviting certain established institutions with proven market expertise and/or experience using Clearpool. Proposals can be made using this form. At a later stage, anyone able to stake the minimum amount of CPOOL required will be eligible to serve as an Oracle. There is no date planned for this stage as of yet.
How much CPOOL do Oracles stake?
The minimum stake is 200,000 CPOOL for each Oracle. Oracles will be able to stake more than this minimum amount. Whilst there is no maximum, voting power is capped at 10% of total CPOOL staked.
How much CPOOL can I stake?
There is no minimum and no maximum. You can stake any number of CPOOL. Oracle voting power is capped at 10% of the total CPOOL staked.
Is there an unbonding period?
No. However, you will not receive any rewards from the epoch within which you unstake, so it is optimal to unstake at the beginning of a new epoch.
What are the benefits of being an oracle vs a staker?
Oracles can charge their chosen commission rate on the emission rewards that they earn with any CPOOL that has been staked to their pool. However, Oracles must be sure to vote during each epoch in order to be eligible for rewards. Stakers only have to decide which Oracle(s) to stake to.
What is the commission percentage, and how does it change?
The Oracle commission is set by the Oracle themselves and can be anything from 0–100%. Oracles can change their commission rate at any time; however, any changes will only take place at the beginning of the following epoch.
Will staking come to Polygon?
There are currently no plans to launch staking on Polygon. The team will always evaluate requests from the community.
When and how will I receive my staking rewards?
Staking rewards will be available after each epoch and can be claimed or re-staked at any time.
Is there an unbonding period for Oracles?
Oracles, just like regular stakers, can unstake at any time. If the Oracle’s total stake in their own staking pool is lower than the minimum requirement, the Oracle will turn inactive, and will need to re-stake at least the minimum requirement to become active once again.
