Protocol Overview
Composable Leverage on PulseChain
Protocol Overview
GLOW Protocol is a composable leverage platform built on PulseChain, forked from Gearbox Protocol. Users access leveraged positions across DeFi protocols while maintaining non-custodial control through Glow Accounts - isolated smart contracts that hold user plus borrowed funds.
The protocol serves three primary users: passive lenders who supply liquidity for yield, active borrowers who use leverage across DeFi protocols, and NEON stakers who receive 70% of protocol revenues through profit sharing.
GLOW operates multiple lending pools for diverse PulseChain assets including WPLS, PLSX, PLS, HEX, Incentive, DAI from Ethereum, USDC from Ethereum, USDT from Ethereum, BTC, and pDAI. Each pool maintains independent parameters including utilization ratios, liquidation thresholds, and risk settings. This multi-pool architecture enables users to supply and borrow across the full spectrum of PulseChain assets while maintaining isolated risk management for each token.
Core Architecture
Glow Account System
Glow Accounts function as isolated smart contracts that hold combined user and borrowed funds, enabling up to 10x leverage while maintaining strict fund custody. Unlike traditional lending where borrowed assets transfer directly to user wallets, GLOW locks all funds within these specialized contracts. Users retain full control over position management but cannot withdraw borrowed capital directly.
The Glow Account interface demonstrates how users execute complex multi-step operations. When opening leveraged positions, users can add collateral, borrow additional funds at selected ratios, and execute swaps - all within the isolated contract environment. The funds never leave the Glow Account, ensuring lenders remain protected while borrowers access amplified capital.
Available Glow Account Operations:
Users can execute multiple whitelisted actions through their Glow Accounts:
Add/Remove Collateral: Users can increase position safety by adding more collateral assets or remove excess collateral when health factors allow. This flexibility enables dynamic risk management as market conditions change.
Adjust Leverage: The leverage slider system enables real-time position sizing adjustments. Users can increase leverage for higher exposure or reduce leverage to improve account safety, all while funds remain within the isolated contract.
Execute Swaps: All trading operations route through Phiat protocols for optimal execution. Users can swap between whitelisted tokens, rebalance positions, or close trades while maintaining the isolated fund structure.
Borrow/Repay: Users can borrow additional funds up to their leverage limits or repay portions of their debt to improve health factors. The borrowing capacity adjusts dynamically based on collateral value and market conditions.
Account Health Management:
The Health Factor calculation becomes critical for position safety. The interface displays real-time health metrics, collateral values, borrowed amounts, and liquidation thresholds. Users must monitor these metrics continuously since health factors below 1.0 trigger automatic liquidation to protect lender capital.
Whitelisted Action Security:
The Glow Account system restricts interactions to pre-approved protocols and tokens. This whitelist prevents users from sending funds to malicious contracts or swapping into dangerous assets. The restriction system protects both individual users and the broader protocol from attack vectors while enabling composable DeFi interactions.
Account security relies on two restriction lists: allowed contracts prevent interaction with vulnerable smart contracts, while allowed tokens block swapping into malicious or highly volatile assets. These lists expand through protocol updates as new integrations prove their safety and utility.
Receipt Token Mechanics
When users supply assets to lending pools, they receive Receipt Tokens representing their proportional pool ownership. These ERC-4626 compliant tokens automatically compound interest without manual claiming, similar to Compound's cTokens but with enhanced features.
Receipt Token value increases continuously as borrowers pay interest to the pool. The compounding happens through price appreciation rather than token quantity changes, meaning your 100 Receipt Tokens become worth more underlying assets over time instead of becoming 105 tokens.
Withdrawal availability depends on pool utilization. High utilization periods may temporarily limit withdrawals as funds actively support leveraged positions. The protocol maintains this design to ensure borrowed capital remains available for ongoing positions while protecting lender interests through higher yields during high-demand periods.
Revenue Model & Economics
GLOW captures 25% of the interest spread between borrowing and lending rates. This revenue distributes across three specific allocations: 70% flows to NEON stakers as profit sharing, 25% funds protocol operations and development, and 5% drives NEON token buybacks with subsequent burns.
Consider a practical example: borrowers pay 20% APY while lenders receive 10% APY, creating a 10% spread. The protocol takes 25% of this spread (2.5%) as revenue. On $1 million borrowed annually, this generates $25,000 protocol revenue. NEON stakers receive $17,500, operations receive $6,250, and $1,250 purchases NEON tokens for burning.
The buyback mechanism creates continuous demand pressure on NEON tokens while reducing circulating supply. Combined with profit sharing distributions, this structure aligns long-term token holder interests with protocol growth and sustainability.
Borrowing & Leverage
Borrowing operates through Glow Accounts with leverage ratios up to 10x. Users deposit collateral, select leverage multipliers, and execute positions across integrated DeFi protocols. The borrowed funds remain locked within accounts while users direct trading and farming activities through approved interfaces.
Position health depends on the Health Factor calculation: (Collateral Value × Liquidation Threshold) ÷ Borrowed Amount. Values above 2.0 indicate safety, while ratios between 1.1-1.5 require monitoring. Health factors below 1.0 trigger automatic liquidation by third-party liquidators who earn fees for maintaining protocol solvency.
Liquidation Mechanics:
When Glow Accounts drop below Health Factor 1.0, liquidation becomes available to protect lender capital. The GLOW team operates liquidation bots for protocol safety, though anyone can execute liquidations and earn rewards. The liquidation fee totals 7% of the collateral value: 3% flows to passive lenders as insurance against bad debt, while 4% goes to the liquidator performing the action.
This fee structure creates strong incentives for rapid liquidation response while building protocol reserves. The 3% allocation to lenders helps maintain Receipt Token value stability during market stress by compensating for potential losses from underwater positions.
Leverage farming enables users to borrow funds and deploy them across existing DeFi protocols for amplified yields. The modular architecture enables rapid integration of new farming opportunities as they emerge on PulseChain. Users can power farm through integrated protocols by borrowing additional capital for larger positions across these expanding protocol partnerships.
The borrowing interface displays Glow Account information including Health Factor, Collateral Value, Borrowed Value, and available borrowing capacity. Users can select leverage ratios while monitoring account safety through real-time health factor calculations. The interface provides immediate feedback on borrowing limits and position safety.
Trading and Swaps:
All swap operations within the GLOW platform execute through Phiat protocols, ensuring liquidity access and price efficiency. When users execute leveraged positions or rebalance collateral, these transactions route through Phiat infrastructure for optimal execution and minimal slippage.
[Screenshot 4 goes here - Statistics dashboard showing health factors and liquidation data across multiple Glow Accounts]
The statistics dashboard reveals the broader Glow Account ecosystem with total opened positions and average leverage ratios across all accounts. Individual account details show specific leverage ratios, health factors, and debt amounts. Accounts with concerning health factors display liquidation buttons, enabling third-party liquidators to maintain protocol safety while earning fees.
HoloVault Staking System
HoloVault enables NEON token staking with time-based reward multipliers. Lock periods range from no commitment (1.0x multiplier, 8.6% APR) to maximum 5555-day locks (3.0x multiplier, 25.9% APR). The 15-year maximum lock demonstrates extreme long-term protocol alignment while offering the highest available returns.
Reward distribution occurs weekly with profits sourced from protocol revenue sharing. The 70% allocation to stakers comes from lending spread fees, liquidation penalties, and integration partnerships. When rewards are added to HoloVault, they distribute over a 7-day period to prevent sudden dilution. Stakers can compound rewards by restaking or claim for immediate use.
Emergency withdrawal remains available with penalty structures: regular stakes incur 1% fees while locked stakes face 30% penalties. This mechanism maintains protocol stability by discouraging frivolous unstaking while preserving user exit options during genuine emergencies.
User Operations
Lending Operations
Lenders deposit assets into pools receiving Receipt Tokens that appreciate through automatic compounding. Zero fees apply to deposits and withdrawals, maximizing capital efficiency compared to traditional lending platforms charging 0.3-1% fees.
Pool utilization directly affects returns - higher borrowing demand increases APY to attract additional lenders. The two-slope interest model prevents sudden rate spikes while maintaining borrower predictability and lender profitability across different market conditions.
Withdrawal timing depends on pool utilization rates. During high-demand periods, some liquidity remains locked supporting active positions, but this generates higher yields for remaining lenders. The system balances immediate liquidity needs with optimal capital deployment.
Position Management
Active position monitoring through the statistics dashboard shows total opened positions, mean leverage across accounts, and average health factors. Current data indicates 39 total positions with 3.95x mean leverage and 6.26 average health factor, suggesting conservative risk management by users.
Position liquidation becomes available when health factors drop below 1.0, with liquidators earning fees for maintaining protocol safety. The dashboard displays individual account details including leverage ratios, health factors, and debt amounts with one-click liquidation buttons for immediate action.
Risk management requires maintaining health factors above 1.5 to avoid liquidation proximity. Users can add collateral, reduce debt through partial repayment, or close profitable positions to improve account safety. Market volatility monitoring helps anticipate potential liquidation scenarios before they materialize.
Staking Strategy
Lock period selection balances reward optimization with liquidity preferences. Short-term locks (60-120 days) provide moderate returns with reasonable commitment periods, suitable for users testing protocol mechanics. Long-term locks (365-5555 days) maximize returns for users with strong protocol conviction.
The 5555-day maximum lock offers 25.9% APR through 3.0x multipliers, representing a 15-year commitment that aligns staker interests with long-term protocol success. This extreme lock period attracts users viewing NEON as a generational wealth building opportunity rather than short-term speculation.
Reward claiming flexibility allows daily harvesting or compound reinvestment. Compound staking amplifies returns over time, particularly beneficial for long-term locked positions where additional staking doesn't affect the original unlock timeline.
Technical Implementation
Smart contract architecture centers on modular design with Pool Managers handling lending operations and Glow Managers overseeing account creation and risk management. Price oracles provide real-time feeds for liquidation calculations while the HoloVault manages staking mechanics and reward distribution.
Security features include multi-signature requirements for critical functions, timelock mechanisms for parameter changes, and emergency pause capabilities. Account isolation prevents individual liquidations from affecting broader protocol stability, while allowed lists restrict interaction with untested protocols.
Integration specifications support current connections with Betterbank and Phiat protocols while maintaining expansion capability for future partnerships. The modular architecture enables adding new farming opportunities and trading venues without disrupting existing operations.
Performance optimization includes account reuse systems where users borrow pre-deployed contracts rather than creating new ones, reducing gas costs significantly. Batch operations allow multiple actions within single transactions while efficient liquidation algorithms minimize network congestion during market stress.
Risk Framework
Protocol-level risks include smart contract vulnerabilities mitigated through battle-tested Gearbox codebase adoption, market correlation risks during broad downturns, and oracle manipulation attempts countered through multiple price feed sources.
User-level risks vary by participation type. Lenders face utilization constraints during high borrowing periods but benefit from higher yields. Borrowers risk liquidation through inadequate health factor management but can access capital efficiency unavailable elsewhere. Stakers face lock period commitments but receive direct protocol revenue sharing.
Liquidation mechanics protect lender capital through automated position closure when borrower collateral becomes insufficient. Third-party liquidators earn fees for maintaining this safety mechanism, creating economic incentives for rapid response during market volatility.
The 25% protocol fee on interest spreads funds insurance mechanisms and development activities while the 5% NEON buyback creates deflationary pressure supporting token value over time.
GLOW Protocol establishes composable leverage infrastructure on PulseChain through innovative Glow Accounts enabling cross-protocol capital deployment. The zero-fee lending structure, profit-sharing tokenomics, and modular architecture create sustainable incentives for all participants while maintaining security through isolated account risk and automated liquidation systems.
Last updated