GLOW Protocol

Composable Leverage on PulseChain

What is GLOW

GLOW Protocol represents a revolutionary approach to leverage trading in decentralized finance, built specifically for PulseChain's expanding ecosystem. As a fork of the battle-tested Gearbox Protocol, GLOW inherits proven mechanics while optimizing for PulseChain's unique advantages and growing DeFi landscape.

At its core, GLOW solves the fundamental challenge of providing leverage while maintaining security for all participants. Traditional leveraged trading often requires users to send borrowed funds directly to their wallets, creating counterparty risk for lenders. GLOW's innovation lies in Glow Accounts - isolated smart contracts that hold both user collateral and borrowed funds, enabling leveraged trading without compromising lender security.

This architecture creates a win-win ecosystem where lenders earn yield on their capital, borrowers access amplified positions across multiple protocols, and the protocol generates sustainable revenue through interest spreads. The system's composability means it can integrate with virtually any DeFi protocol on PulseChain, creating endless possibilities for leveraged strategies.

The Three Pillars of GLOW

🏦 Passive Lenders - Supply liquidity to earn competitive yields with complete flexibility. No fees, no lock periods, no impermanent loss - just pure lending yield from borrower interest payments.

⚡ Active Borrowers - Access up to 10x leverage across integrated DeFi protocols. Execute complex strategies, amplify yields, and trade with borrowed capital while maintaining full position control.

💎 NEON Stakers - Become protocol owners by staking NEON tokens. Receive 70% of all protocol revenues through profit sharing, with time-locked staking providing up to 3x reward multipliers.

Passive Lending

How Lending Works

Passive lending forms the backbone of GLOW's leverage system, providing the capital that borrowers use to amplify their positions. Unlike traditional DeFi lending where you're exposed to various risks, GLOW's lending pools offer a remarkably clean and straightforward value proposition.

Capital providers deposit single assets into dedicated lending pools, immediately beginning to earn yield from borrower interest payments. The beauty of this system lies in its simplicity and flexibility - you maintain complete control over your capital while earning competitive returns.

Key Benefits:

Zero deposit/withdrawal fees - Keep 100% of your yields
No lock-up periods - Withdraw whenever liquidity allows
No impermanent loss risk - Single asset exposure only
Automatic interest compounding - Earnings grow without manual intervention
Battle-tested mechanics - Based on proven lending protocols

Dynamic Interest Rate Model

Pool profitability operates on a simple supply and demand principle: higher utilization from borrowers drives higher yields for lenders. This creates natural market equilibria where attractive yields draw more lenders during high-demand periods, while lower rates during quiet periods maintain sustainable borrowing costs.

The protocol implements linear extrapolation for interest rate calculations, following Aave's proven approach. This model ensures predictable rate changes and prevents sudden spikes that could destabilize positions. As utilization increases, rates rise gradually, providing early signals to both lenders and borrowers about market conditions.

Receipt Token

When you supply assets to any lending pool, you receive Receipt Tokens (nWPLS, nETH, nHEX, etc.) that represent your proportional ownership of that pool. These tokens are far more than simple IOUs - they're sophisticated financial instruments that automatically compound your earnings.

Technical Features:

ERC-4626 compliant for maximum DeFi compatibility and composability
Auto-compounding mechanics - Interest automatically reinvests without gas costs
Value appreciation model - Your tokens become worth more underlying assets over time
Transferable assets - Use Receipt Tokens across other DeFi protocols
Enhanced Compound mechanics - Similar to cTokens but with modern improvements

How Compounding Works: Unlike protocols that increase your token quantity, Receipt Tokens appreciate in value. Your 100 Receipt Tokens don't become 105 tokens - instead, they become redeemable for more of the underlying asset. This approach simplifies accounting and reduces gas costs while providing the same compounding benefits.

Liquidity Management

Withdrawal Availability: During high utilization periods, withdrawals may be temporarily limited to ensure borrowed capital remains available for active leveraged positions. This is a feature, not a bug - it ensures that the protocol can honor its commitments to borrowers while protecting lender capital.

When utilization is high, it typically means borrowers are paying premium rates, which translates to higher yields for lenders. The temporary withdrawal restrictions during these periods are offset by the enhanced earnings, creating a balanced system that benefits all participants.

Borrowing

Borrowing happens through contracts called Glow Accounts. Each wallet can open any amount of Glow Accounts that are isolated between them.

Glow Accounts represent a paradigm shift in how leveraged trading works in DeFi. These aren't just smart contracts - they're sophisticated financial instruments that solve the fundamental trust problem in leverage trading. Traditional leverage requires borrowers to receive funds directly in their wallets, creating massive counterparty risk for lenders. Glow eliminates this risk entirely.

Think of a Glow Account as your personal DeFi trading vault - a smart contract that you control but cannot drain. This isolated environment holds both your collateral AND borrowed funds, executing your trading strategies while keeping lenders protected. You maintain complete control over position management, trading decisions, and strategy execution, but you cannot simply withdraw the borrowed capital.

Core Capabilities:

Isolated fund custody - All assets remain within the smart contract
Full trading control - Execute any approved strategy or trade
Multi-protocol integration - Access the entire PulseChain DeFi ecosystem
Leveraged position management - Up to 10x amplification of your capital
Advanced security features - Whitelist protection and automated safeguards

Account Creation Pathways

There are 3 main ways to create a glow account but fundamentally all these are the same. You can either just add collateral and borrow from borrow page, do the above but stake funds in a farm through Power farm and finally do the previous but from a Trading UI perspective.

Simple Borrow

For users who prefer a step-by-step approach, the BORROW page provides granular control over account setup. You can carefully configure collateral ratios, select specific debt assets, and gradually build your leveraged position with full transparency at each step.

Power Farms

Power Farm transforms the complex process of opening leveraged positions into a single, elegant transaction. This innovation lets you go from having no exposure to being fully positioned in your chosen strategy within seconds.

Power Farm Process:

Choose your debt asset - Select what you want to borrow (PLS, HEX, etc.)
Select collateral assets - Single or multi-asset collateral supported
Set leverage multiplier - Anywhere from 1.1x to 10x amplification
Pick farming strategy - Choose from integrated protocols and yield opportunities
Execute everything - One multicall transaction handles the entire setup

Example Power Farm Flow: You have 10,000 PLS and want 5x leveraged exposure to a HEX/PLS LP farm:

Deposit: 10,000 PLS collateral
Borrow: 40,000 PLS (4x your collateral)
Total position: 50,000 PLS equivalent
Strategy: Deployed into HEX/PLS LP with amplified yield
Result: 5x exposure to the farming opportunity with 5x the potential rewards

Leverage Trading

Leverage Categories

Long Positions - Amplified Upside

Long strategies involve borrowing funds to purchase assets you expect to appreciate. GLOW's architecture makes this incredibly capital efficient - instead of buying 10,000 PLS with your pDAI, you can borrow additional funds to buy 40,000 PLS, amplifying both potential gains and exposure.

Example Long PLS/pDAI 5x Strategy:

You want to use 10,000 PLS as collateral

This action will borrow 40,000 PLS worth of pDAI then swap pDAI to PLS. Your new Glow account will end up with 50,000 worth of PLS. Your accounts value will increase if PLS/pDAI increases.

Short Positions - Profiting from Decline Short strategies involve borrowing assets to immediately sell them, expecting. Since you're borrowing the actual asset (not synthetic positions), you can deploy these assets across other protocols for additional yield while maintaining your short exposure.

Example Short HEX/PLS 5x Strategy:

You want to use 20,000 PLS as collateral

This action will borrow 80,000 PLS worth of HEX then swap HEX to PLS. Your new Glow account will end up with 100,000 worth of PLS. Your accounts value will increase if HEX/PLS drops.

Pro tip : you could stake the PLS in a power farm and earn additional yield !

Boosted Strategies - Composable Leverage The true innovation of GLOW lies in its composability. Your leveraged positions aren't limited to simple long/short trades - you can deploy borrowed capital across any whitelisted DeFi protocol, creating sophisticated yield strategies that would be impossible with traditional leverage.

Example Boosted Strategy:

Collateral: 15,000 PLS
Leverage: 4x
Total Capital: 60,000 PLS equivalent
Additional Yield: Stake PLS in a yield farming protocol
Result: 4x amplified farming rewards

Key Advantages Over Traditional Leverage

🔄 Real Asset Trading - No synthetic derivatives or complex instruments. You're trading actual tokens with real utility and value, not paper contracts that can disconnect from underlying assets.

📈 Zero Funding Rates - Unlike perpetual futures that charge ongoing funding fees based on long/short imbalances, GLOW uses real assets with no additional funding costs beyond your borrowing interest.

🏗️ True Composability - Integrate with the entire PulseChain DeFi ecosystem. Your leveraged positions can participate in any protocol, earning multiple yield streams simultaneously.

⚡ Capital Efficiency - Use the same collateral to access multiple strategies and protocols simultaneously, maximizing the productive use of your capital.

Glow Account

Management

Collateral Operations

Add Collateral - Strengthen position safety by depositing additional assets, improving your Health Factor and increasing borrowing capacity
Remove Collateral - Extract excess collateral when your Health Factor allows (must remain above 1.0), optimizing capital efficiency

Trading Execution All swap operations route through Piteas protocol, ensuring optimal execution and minimal slippage. The integration provides access to the deepest liquidity pools on PulseChain while maintaining the security benefits of the whitelist system. You can rebalance positions, take profits, cut losses, or completely restructure your strategy - all while funds remain safely isolated.

Debt Management

Borrow Additional Funds - Access more capital up to your maximum leverage limits, enabling position scaling or new opportunity capture
Repay Debt - Reduce borrowed amounts to improve Health Factor, lower interest costs, or prepare for collateral withdrawal

Revenue Model

GLOW captures 25% of the interest spread between borrowing and lending rates.

Example Breakdown

Borrowers pay: 30% APY
Lenders receive: 20% APY
Protocol spread: 10%
Protocol revenue: 2.5% (25% of spread)

Revenue Distribution (on $1M borrowed annually = $25K fees)

70% ($17,500) → NEON stakers (profit sharing)
25% ($6,250) → Insurance fund & operations
5% ($1,250) → NEON buybacks & burns

Closing a Glow Account

Option 1: Swap all assets to the underlying and repay the debt

The protocol will exchange all the non-underlying asset funds to the underlying asset on Piteas and repay your debt. You will receive the remaining funds to your personal wallet.

Choose the maximum size of the slippage that you will tolerate in the options page in the top right corner, and click Swap and get tokens button. If the price falls by more than the slippage while your trade is being confirmed, the trade will be reverted.

Option 2: Close a Glow Account by repaying the debt and keeping assets

You repay the loan with your own funds. This means you have more funds on your personal wallet. After repayment is done, the assets which were on your Glow Account will be sent to your wallet. This option is possible only if your personal wallet balance in the denominated asset is at least of the amount required for repaying the debt.

Health Factor & Safety

The Health Factor is a numeric representation of your account's financial health and safety. It serves as the primary indicator of liquidation risk for your Glow Account position.

Critical Safety Rule: If your Health Factor drops below 1.0, your position becomes eligible for liquidation. The higher your Health Factor, the safer your position.

Health Factor Formula

The Health Factor is calculated using the following formula:

Hf(t) = TWV(t) / (b(t) + interest_accrued(t))

Where:

Hf(t) = Health Factor at time t
TWV(t) = Threshold Weighted Value at time t
b(t) = Borrowed amount at time t
interest_accrued(t) = Accumulated interest at time t

Mathematical Components

Total Value (TV)

The Total Value represents your Credit Account's total balance denominated in the underlying asset.

Formula:

TV(t) = Σ ci(t) × pi(t)

Where:

ci(t) = Balance of the i-th asset in your credit account
pi(t) = Price of the i-th asset calculated in underlying asset (from oracle)

Threshold Weighted Value (TWV)

The Threshold Weighted Value applies liquidation thresholds and quotas to determine the effective collateral value for Health Factor calculations.

Formula:

TWV(t) = ci(t) × pi(t) × LTi

Where:

ci(t) = Balance of the i-th asset in credit account
pi(t) = Price of the i-th asset in underlying asset (from oracle)
LTi = Liquidation threshold for the i-th asset

Liquidation System

When doing leverage with Glow, your Glow Account becomes the collateral for external protocols/actions: both your initial funds and the borrowed amount you got from the protocol. Glow Protocol sees which tokens your portfolio consists of and can determine its value at all times, which are always calculated in the underlying borrowed asset which you opened that Glow Account in.

When Liquidations Occur

Positions become liquidatable when Health Factor drops below 1.0, protecting lender capital.

Fee Structure (7% total)

3% → Passive lenders (insurance against bad debt)
4% → Liquidator reward (execution incentive)

Execution

GLOW team operates liquidation bots
Anyone can execute liquidations

Liquidations are there to protect liquidity providers' capital which by default shouldn't be exposed to directional market risk which traders & farmers take. As a leverage user - you can avoid liquidations, which also saves you from the fees paid to liquidators & the protocol.

What can I do if my Health Factor is close to 1?

In case you are in position which has correlated collateral to debt [like stablecoin debt to a stablecoin farm in Power Farming, or PLS debt to leveraged HEX position] - you can take higher leverage as the LTVs of your position <> debt are essentially correlated. As such, it allows you to take 9x+ leverage in some extreme cases. Still, beware that oracles can fluctuate, so don't max out.

1. Add collateral

The easiest method to improve your Health Factor is by adding more collateral.

2. Change your strategy or farm

If you are in a strategy that has a directional trade that's leading to the HF dropping, a possible better idea could be to change to a strategy with lesser volatile/base asset to preserve your Glow Account. If your debt is PLS and you are short PLS in a bull market... maybe join the PulseChain bull run, anon.

3. Decrease debt

Add some of the collateral back to the Glow Account in the form of the base asset you borrowed, this will help you lower your leverage and thus improve your health factor.

Practical Example

Let's walk through a Health Factor calculation:

Example Position

Collateral: 10,000 PLS (worth $1,000)
Borrowed: 4,000 PLS (worth $400)
PLS Liquidation Threshold: 85%

Calculation Steps

Total Value (TV):
```
TV = 10,000 PLS × $0.10 = $1,000
```

Threshold Weighted Value (TWV):

TWV = 10,000 PLS × $0.10 × 0.85 = $850

Health Factor:
```
Hf = $850 / $400 = 2.125
```

Result Analysis

With a Health Factor of 2.125, this position is in the Safe Zone and has significant buffer before liquidation risk.

HoloVault Staking System: Become a Protocol Owner

The Power of Protocol Ownership

HoloVault transforms NEON token holders into true protocol owners through sophisticated staking mechanics that align long-term interests with protocol success. Unlike simple token rewards, HoloVault distributes actual protocol profits to stakers, making them direct beneficiaries of GLOW's growth and adoption.

The system implements time-based reward multipliers that dramatically favor long-term commitment. This isn't arbitrary - it reflects the economic reality that protocols benefit most from stable, committed stakeholders who support long-term development rather than short-term speculation.

Comprehensive Staking Options

The HoloVault system accommodates every type of user, from cautious newcomers testing the waters to maximum conviction holders planning generational wealth strategies:

Weekly Distribution Schedule: Every week, 70% of protocol revenues flow into HoloVault for distribution to stakers. This creates a predictable income stream tied directly to protocol performance - as GLOW grows, your rewards grow proportionally.

Revenue Sources Include:

Interest spread capture (25% of borrowing-lending spread)
Liquidation penalty fees (3% of liquidated collateral)
Integration partnership revenues (fees from protocol partnerships)
Trading fee sharing (percentage of swap fees from Piteas integration)

7-Day Vesting Protection: When new rewards are added to HoloVault, they distribute over a 7-day period rather than instantly. This prevents sudden dilution and whale manipulation while ensuring steady reward flow for existing stakers.

Advanced Staking Strategies

The Compound Maximizer Rather than claiming rewards immediately, reinvest them back into staking to compound your position over time. This strategy works particularly well for long-term locked positions where additional staking doesn't affect your original unlock timeline.

Example Compound Strategy:

Initial stake: 100,000 NEON (5555-day lock)
Weekly rewards: ~500 NEON (at 25.9% APR)
Action: Restake rewards immediately
Result: Exponential growth in staking position over 15 years
Final position: Significantly larger than simple interest calculations

The Ladder Approach Spread your NEON across multiple lock periods to balance optimization with flexibility:

40% in 5555-day locks (maximum returns)
30% in 365-day locks (strong returns, annual flexibility)
20% in 120-day locks (moderate returns, quarterly flexibility)
10% unlocked (maximum flexibility, baseline returns)

The Conviction Scaling Strategy Start conservative and increase commitment as you gain confidence:

Begin with unlocked staking to test mechanics
Graduate to 60-120 day locks as you understand the protocol
Move to annual locks as conviction builds
Consider maximum locks only with full protocol understanding

Emergency Withdrawal System

GLOW recognizes that life circumstances can change, making even well-planned long-term commitments potentially problematic. The emergency withdrawal system provides an escape valve while maintaining protocol stability through economic incentives.

Penalty Structure:

Regular stakes (unlocked): 1% penalty fee
Locked stakes (any duration): 30% penalty fee
Penalty distribution: 100% goes to remaining stakers as rewards

When to Consider Emergency Withdrawal:

Genuine financial emergencies requiring immediate liquidity
Major life changes affecting your investment timeline
Loss of confidence in protocol fundamentals (though consider partial rather than full exit)

The 5555-Day Vision

The maximum 5555-day lock period (approximately 15 years) represents more than just a staking option - it's a statement of belief in the long-term potential of decentralized finance and PulseChain specifically. This ultra-long commitment offers:

Maximum Reward Multiplier: 3.0x multiplier provides 25.9% effective APR on protocol revenues, potentially life-changing returns over 15 years of compounding.

Generational Wealth Building: Designed for users viewing NEON as a multi-decade investment rather than short-term trading opportunity.

Protocol Alignment: Your interests become perfectly aligned with long-term protocol success, creating powerful incentives for sustainable development.

Legacy Planning: 15-year timeframes naturally incorporate estate and legacy planning considerations, making this suitable for wealth transfer strategies.

Risks and Disclaimers

Oracle Risk

GLOW uses Oracles . Oracle failures or incorrect data can cause cascading liquidations and bad debt.

Smart Contract Risk

Complex smart contracts may contain bugs, vulnerabilities, or be exploited in unintended ways, leading to partial or complete loss of funds.

Third-Party Protocol Risk

Lender assets are exposed to integrated protocols. Exploits on these protocols can result in loss of lender capital. That is why we will have limits in deposits that will be increasing slowly to accomodate growth.

Liquidation Failures

Liquidators may malfunction or fail to perform, potentially under-collateralizing the protocol and causing Lenders losses. However fees are creating an insurance fund that automatically covers any bad debt created from delayed liquidations.

Withdrawal Limitations

High pool utilization may temporarily prevent withdrawals when most liquidity is actively borrowed. But during that period lenders will enjoy very high APR.