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Notes about methods

In this section, we describe the implementation of the functions of our lending contract.

Instantiating contracts

Each asset that we will accept to be lent will have two underlying tokens: the shares token and the reserves token. The shares token will represent a user's share of the lent asset which they can then withdraw and the reserves token will represent the amount of asset lent since we don't want to keep track of all addresses and amounts which have borrowed the assets. We will simply take this amount from the total supply of the underlying reserve token. So when we are accepting an asset for lending, we need to create a new token contract for shares and for reserves. We will define an internal function for this:

fn _instantiate_shares_contract(&self, contract_name: &str, contract_symbol: &str) -> AccountId {
let code_hash = self.lending.shares_contract_code_hash;
let salt = (<Self as DefaultEnv>::env().block_timestamp(), contract_name).encode();
let hash = xxh32(&salt, 0).to_le_bytes();

let contract =
SharesContractRef::new(Some(String::from(contract_name)), Some(String::from(contract_symbol)))

This function will instantiate our SharesContract contract and return the AccountId of the instantiated contract. We will call this function when allowing assets.

Simulating oracle

As mentioned before, we will not be using a price oracle in our example, but we will use our own simulated oracle. And by simulated we mean adding some storage fields which hold the info about price of an asset and a function only callable by the account with MANAGER role, which will set the price of the asset. For that we define these functions:

fn set_asset_price(
&mut self,
asset_in: AccountId,
asset_out: AccountId,
price: Balance,
) -> Result<(), LendingError> {
set_asset_price(self, &asset_in, &asset_out, &price);

/// this internal function will be used to set price of `asset_in` when we deposit `asset_out`
/// we are using this function in our example to simulate an oracle
pub fn set_asset_price<T>(instance: &mut T, asset_in: &AccountId, asset_out: &AccountId, price: &Balance)
T: Storage<Data>,
{, asset_out), price);

Allowing assets

If we just started lending and borrowing random assets or using random assets as collateral there would be chaos in our smart contract. Regarding lending, it would not be a big problem, since if somebody is willing to borrow an asset, it would generate a profit for the lender. But if we started accepting random assets as collateral, anyone could just throw a random coin as collateral and then just for example rug pull it and also keep the borrowed assets. Because of this we will only accept certain assets for lending and using as collateral. For an asset to be accepted, an account with the MANAGER role needs to allow it with the allow_asset function. We will use a modifier from OpenBrush, which serves similarly to Solidity's function modifiers. The function will look like this:

fn allow_asset(&mut self, asset_address: AccountId) -> Result<(), LendingError> {
// we will ensure the asset is not accepted already
if self.is_accepted_lending(asset_address) {
return Err(LendingError::AssetSupported)

// instantiate the shares of the lended assets
let shares_address = self._instantiate_shares_contract("LendingShares", "LS");
// instantiate the reserves of the borrowed assets
let reserves_address = self._instantiate_shares_contract("LendingReserves", "LR");
// accept the asset and map shares and reserves to it

accept_lending(self, asset_address, shares_address, reserves_address);

Lending assets

For lending the assets we will use the function lend_assets(asset_address, amount), where asset_address is the address of PSP22 we want to deposit and amount is the amount of asset deposited. Some checks need to be checked to assure the correct behavior of our contract. The asset deposited needs to be recognized by our contract (manager must have approved it). If it is not accepted, an error will be returned. Then the user must have approved the asset to spent by our contract and the user's balance must be greater than or equal to amount. So we will transfer the asset from the user to the contract, mint shares to the user. To perform a cross contract call we will be using the references to contracts SharesRef. We will also add when_not_paused modifier to this function, so it can be only called when the contract is not paused. The code will look like this:

fn lend_assets(&mut self, asset_address: AccountId, amount: Balance) -> Result<(), LendingError> {
// we will be using these often so we store them in variables
let lender = Self::env().caller();
let contract = Self::env().account_id();
// ensure the user gave allowance to the contract
if PSP22Ref::allowance(&asset_address, lender, contract) < amount {
return Err(LendingError::InsufficientAllowanceToLend)
// ensure the user has enough assets
if PSP22Ref::balance_of(&asset_address, lender) < amount {
return Err(LendingError::InsufficientBalanceToLend)
// how much assets is already in the contract
// if the asset is not accepted by the contract, this function will return an error
let total_asset = self.total_asset(asset_address)?;
// transfer the assets from user to the contract|
PSP22Ref::transfer_from_builder(&asset_address, lender, contract, amount, Vec::<u8>::new())
// if no assets were deposited yet we will mint the same amount of shares as deposited `amount`
let new_shares = if total_asset == 0 {
} else {
// else we calculate how much shares will belong us after depositing the `amount`
(amount * self.total_shares(asset_address)?) / total_asset
let reserve_asset = get_reserve_asset(self, &asset_address)?;
// mint the shares token to the user
SharesRef::mint(&reserve_asset, lender, new_shares)?;

Borrowing assets

The borrow_assets(asset_address, collateral_address, amount) function will serve for the users to borrow assets from the smart contract. asset_address is the account id of the asset we want to borrow, collateral_address is the account id of asset which the user wants to use as collateral, and amount is the amount of collateral deposited. Our contract will calculate the value of the deposited collateral and will give the borrower 70% of the collateral value. For pricing, we would use an oracle, but in this example, we will use our 'simulated oracle' - we will just store the price info in our contract and the admin will be able to change it. The liquidation price of the loan will be calculated at 75% of the collateral value. First of all the contract must not be paused, for which we use modifier when_not_paused. After that, for the borrowing to succeed, the collateral_address must be accepted by the contract, the contract needs to have enough allowance to spend the borrower's collateral token, borrower's collateral balance must be equal to or greater than amount and finally, the asset_address must be accepted for borrowing in the smart contract. After we calculate the liquidation price and borrow amount, we ensure the contract has enough assets to provide for the borrower, and we also want the liquidation price of the collateral to be higher than the borrowed amount. Since we are dealing with integers, entering a very low amount (below 10) of collateral may result in the liquidation price being the same as the borrowed amount, which could be exploited. We can surely handle it in many different ways, but again, it is not the purpose of this example so we will deal with it this way. When everything is alright, we will transfer the collateral to the contract, mint an NFT, which stores the information about the loan, to the borrower, then transfer the asset to the borrower, and finally, mint the reserve token. We will mint the same amount that we lent, and we will burn it after the loan is repaid or liquidated. This reserve token will be used to track the amount of the asset which is currently borrowed.

fn borrow_assets(
&mut self,
asset_address: AccountId,
collateral_address: AccountId,
amount: Balance,
) -> Result<(), LendingError> {
// we will be using these often so we store them in variables
let borrower = Self::env().caller();
let contract = Self::env().account_id();
// ensure this asset is accepted as collateral
if !self.is_accepted_collateral(collateral_address) {
return Err(LendingError::AssetNotSupported)
// ensure the user gave allowance to the contract
if PSP22Ref::allowance(&collateral_address, borrower, contract) < amount {
return Err(LendingError::InsufficientAllowanceForCollateral)
// ensure the user has enough collateral assets
if PSP22Ref::balance_of(&collateral_address, borrower) < amount {
return Err(LendingError::InsufficientCollateralBalance)
let reserve_asset = get_reserve_asset(self, &asset_address)?;

// we will find out the price of deposited collateral
let price = get_asset_price(self, &amount, &collateral_address, &asset_address);
// we will set the liquidation price to be 75% of current price
let liquidation_price = (price * 75) / 100;
// borrow amount is 70% of collateral
let borrow_amount = (price * 70) / 100;
// ensure the liquidation price is greater than borrowed amount to avoid misuses
if borrow_amount >= liquidation_price {
return Err(LendingError::AmountNotSupported)
// ensure we have enough assets in the contract
if PSP22Ref::balance_of(&asset_address, contract) < borrow_amount {
return Err(LendingError::InsufficientBalanceInContract)
// we will transfer the collateral to the contract
PSP22Ref::transfer_from_builder(&collateral_address, borrower, contract, amount, Vec::<u8>::new())
// create loan info
let loan_info = LoanInfo {
collateral_token: collateral_address,
collateral_amount: amount,
borrow_token: asset_address,
timestamp: Self::env().block_timestamp(),
liquidated: false,

let load_account =<data::Data>().loan_account;
LoanRef::create_loan(&load_account, loan_info)?;
// transfer assets to borrower
PSP22Ref::transfer(&asset_address, borrower, borrow_amount, Vec::<u8>::new())?;
// mint `borrow_amount` of the reserve token
SharesRef::mint(&reserve_asset, contract, borrow_amount)?;