Here we will outline how the borrowing and lending of tokens works, and occurs mostly on chain.
1. A user who wishes to borrow ETH for a launch (borrower) visits our dapp and fills out all details about his/her new token. This includes the name of it, the ticker (symbol), supply, taxes, wallets, etc. It is during this step that the borrower selects how much ETH they wish to borrow from the DAO's lending pool.
2. The user then approves the transactions and prompts, paying gas and paying the premium to use Opera. Opera deploys the token while simultaneously adds the borrowed ETH to the pairing as soon as the token is deployed on the blockchain. At this stage, the token is not quite live, as the last step is to enable trading.
3. The user enables trading, and now their token is live. Buys fly in, and with each buy/sell fees are collected and sent to Opera's revenue wallet. The revenue wallet distributes the ETH evenly amongst all lenders that have lent ETH to the pool, proportionate to how many shares each lender has.
Example: Let's say there are currently 4 lenders in the pool.
LENDER ONE - 1 ETH
LENDER TWO - 2 ETH
LENDER THREE - 1 ETH
LENDER FOUR - 4 ETH
This would mean that the total ETH available in the DAO's lending pool is 8 ETH.
In this scenario, Lender 4 would own 50% of the pool, since his contributed ETH accounts for 50% of the DAO's total lending pool.
So, if one ETH is borrowed, and the fees + premiums generated equal 1 ETH, Lender 4 would receive approximately half of all fees.
How is this safe?
The reason this system is safe and unexploitable is due to the fact that the ETH is never owned by the borrowers or the lenders, but instead is owned by Opera itself, the smart contracts that make up the system. Our token factory contract borrows liquidity from the DAO and deploys the token on the developer's behalf, and does not grant the borrower any percentage of the initial supply.
How is this profitable?
The Opera Ecosystem has a way of charging fees that makes the system profitable for lenders, stakers, and profitable as a business model as a whole. Each token deployed costs an upfront fee which is shared between Opera (for facilitating this service) and its lenders, and also has a small transaction tax coded within every token to ensure the network is collecting fees from deployed tokens the longer the capital is being used.