Like Aave, Acumen uses non-custodial liquidity pools for each asset class rather than a p2p structure, where a depositor’s assets are being lent out to another user. These liquidity pools allow users the ability to seamlessly move in and out of the pools as they desire.
Assets supplied to each pool are represented by a zToken, which entitles the owner to an increasing quantity of the underlying asset. zTokens become convertible into a growing sum of the underlying asset as the liquidity pools accrue interest, a feature of borrowing demand.
Users can use zTokens as collateral to borrow assets from Acumen, which can be used anywhere in the Solana Ecosystem. To borrow from the protocol, unlike peer-to-peer protocols, users only must designate which asset they want to borrow; there are no maturity dates, funding periods, etc. Everything is done in a fast, decentralized manner.
The assets used as collateral represented as zTokens are used as collateral to borrow from the liquidity pools. Each market has a collateral factor ranging from 0-1. The collateral factor represents the amount of underlying assets that can be borrowed from each pool. The borrowing capacity is the amount a user can borrow.
The Borrowing Capacity is defined as:
The borrowing capacity ensures that users cannot increase the total value of borrowed assets in their account, guarding the protocol from default risk. Once the borrowing capacity is reached, a user can no longer take actions to increase the value of assets in his account: borrow, redeem zToken collateral, or transfer zToken Collateral.