What is LOX?
LOX is the token of Locksley, an on-chain lending protocol that combines a virtual pricing reserve with a fractional cash reserve. Buying LOX contributes USDG to a shared reserve. Part stays available for trading, while part funds loans secured by approved tokenized stocks and other supported real-world assets.
The virtual reserve sets the trading curve's starting price; it is a pricing parameter, not spendable money. Collected interest and fees retained in the real reserve can increase backing per LOX, allowing holders to participate in lending returns. Loan losses reduce backing, and selling depends on available cash. LOX has no guaranteed price or yield.
Pre-launch software. Not independently audited. A passing build or local test suite does not establish mainnet readiness.
The market
The hook holds LOX and USDG as PoolManager claims and supplies custom constant-product quotes. External liquidity is not accepted in the LOX market. Aggregator compatibility must be verified for each integration.
The quote reserve is virtual USDG plus cash, performing principal and conservatively valued auction principal. The virtual reserve sets an opening curve price but cannot be withdrawn. Lending exchanges cash for a receivable; interest and fees increase reserve value, and unrecovered principal reduces it.
Sells require enough cash for their output and the new treasury fee allocation. LOX is not an instantly redeemable deposit and there is no guaranteed floor or yield. Displayed dollar-style values assume USDG remains at par; protocol prices are denominated in USDG.
Loans
Borrowers post approved collateral and receive USDG, less an origination fee. The annual rate is fixed when the loan opens. Interest accrues on outstanding principal; payments settle interest first. Fully repaying releases the collateral. An extension pays current interest and accepts a new rate and term.
The app submits limits for the rate, origination fee, term and deadline you review. A change outside those limits rejects the transaction. USDG approval is required for repayment and extension. Full repayment and extension approvals include a small allowance for interest accrued during confirmation; only the amount due is collected.
Collateral top-ups and repayment remain available when oracle health is unknown or new risk is paused. Repay before expiry or the liquidation threshold to avoid an involuntary sale. Each stock has a separate debt cap in addition to the aggregate lending limit.
| Launch default LTV / liquidation threshold | 50% / 75% |
| Current loan term | Loading on-chain term…, with optional extension |
| Launch default swap / origination fee | 1% / 0.5% |
| Launch default aggregate lending cap | 50% of cash plus principal |
These are deployment defaults, not permanent promises. Consult the current transaction page and contracts for active values.
The leverage loop
Borrowed USDG can buy LOX. Post stock, borrow USDG, then buy LOX with it. The purchase sends USDG back into the market while the loan remains outstanding, and the buy moves the curve price up. Repeat against additional stock collateral. This is intentionally supported: leverage on LOX funded by the bank's own lending reserve.
Each round must satisfy the stock's LTV, its debt cap, available reserve cash and the aggregate utilisation cap. Origination fees, swap fees and loan interest still apply. The LOX bought in this loop is not accepted as collateral by the deployment configuration; another round needs eligible stock.
The loop increases LOX exposure while leaving USDG debt secured by the stock. Selling LOX later depends on its price and available market cash; the loan remains due even if the sale cannot cover it. Posting more stock and buying more LOX does not remove that obligation.
Liquidation and buybacks
Anyone can start an auction for an expired or unhealthy loan. Interest freezes and collateral stays in escrow. Buyers pay USDG directly for any part of the listing; no collateral trading pool is required. The default discount grows by one percentage point per day from the current valid oracle price, reaching 5% after five days. It remains at that floor until sold or repaid. Each asset can have its own bounded schedule, fixed when the auction starts.
Purchase proceeds pay the starter bounty, then restore principal and collect accrued interest into the USDG reserve. Sales stop when the obligation is covered. Unsold collateral and excess proceeds return to the borrower. Principal recovery replenishes cash; collected interest and fees are revenue. Borrowers can still repay during an auction to recover unsold collateral. Unpaid principal is finalized as a loss only when all collateral has sold.
Auction inventory is not cash. Its contribution to LOX backing is capped at unpaid principal and its current oracle value after the maximum discount and starter bounty, whichever is lower. Unsold auctions still consume lending capacity. A failed auction oracle blocks backing-dependent trades while repayment remains available. Up to 64 auctions can be active at once to bound valuation gas; operators must monitor that capacity.
Treasury revenue is split when earned. Its buyback allocation cannot be claimed by the treasury. Once the epoch allows it, anyone can spend that reserved balance to buy and burn LOX. The sell burn is separately accumulated until someone triggers its burn. Neither mechanism guarantees price appreciation.
Oracles and closed markets
Chainlink stock-token feeds account for the issuer multiplier. Feeds may hold the last published value during weekends, holidays and corporate actions. Production defaults to a 26-hour age bound and requires sequencer checks and token pause checks. A stale or paused feed blocks price-dependent actions, including auction purchases and backing-dependent trades. Expired loans can enter escrow without a price read.
The age bound does not eliminate gap risk or prove an open market. Operators must follow a reviewed market-hours policy and pause new risk when necessary. Do not assume a weekend pool price can substitute for a safe feed.
Governance and contract addresses
Owners can change bounded fees, caps, collateral approvals, auction schedules and oracle configuration. A guardian can pause new risk and auction starts/purchases; only the owner can resume it. Loan-book replacement is blocked while principal remains outstanding. Production deployment requires a timelock of at least one day and multisig configuration checks; actual role history and custody must be independently verified before activation.
Risks
- Loans can be extended and liquidations can stall. Seven-day terms do not bound withdrawal waits.
- A roughly one-third drop reaches the initial liquidation threshold at 50% LTV. Actual bad debt depends on execution, further price changes, fees, interest and bounty.
- Absent buyers, token restrictions, oracle outages and sequencer failures can prevent recovery.
- Buying LOX with borrowed USDG creates leverage and can magnify losses.
- Owners and guardians have consequential powers. Verify the deployed governance and its changes.
- The protocol needs an operated liquidation service, alerts and independent review before accepting real funds.