Avocado Fund
A decentralised USDC yield vault and identity-gated lending protocol built on Arbitrum. Lenders earn passive yield. Borrowers build on-chain reputation via AVO Score (0–100) through World ID verification and repayment history.
Overview
Avocado Fund is a two-sided DeFi primitive. On one side, lenders deposit USDC into an ERC-4626 vault and receive yield generated from borrower interest. On the other, borrowers verified by World ID build an on-chain AVO Score (0–100) through repayment history — earning credit tiers from $25 to $1,000. Fully on-chain and non-custodial.
Earn Passive Yield
Deposit USDC and earn competitive APY as borrowers pay interest. Withdraw any time within available liquidity.
On-Chain Reputation
World ID proves uniqueness. AVO Score (0–100) grows with on-time repayments. All tracked transparently on the blockchain.
ERC-4626 Compatible
The vault follows the ERC-4626 tokenised vault standard, making it composable with the broader DeFi ecosystem.
Non-Custodial
Smart contracts hold all funds. The protocol team cannot move user assets. All code is open source.
How It Works
The system has two smart contracts: AvocadoVault (ERC-4626 deposit/yield) and AvocadoLending (credit lines). They work together so that lender capital flows to borrowers and interest flows back.
Lenders
deposit USDC
AvocadoVault
ERC-4626
AvocadoLending
credit lines
Borrowers
AVO Score verified
Interest paid by borrowers → distributed back to lenders as yield
Lenders supply USDC
Any wallet can deposit USDC into the AvocadoVault. The vault mints avUSDC shares proportional to the deposit. These shares appreciate over time as borrower interest accrues.
Capital is deployed to lending
The vault allocates USDC to the AvocadoLending contract. Utilisation is tracked on-chain and displayed in real-time. A cap of $5,000,000 limits total exposure.
Borrowers verify with World ID
Borrowers open the Borrow page, verify their unique personhood via the World ID orb or device, and receive a credit limit tied to their on-chain identity.
Borrowers draw and repay USDC
Verified borrowers draw up to their credit limit. Interest accrues per second. Repayments reduce the principal and release the credit line for future use.
Lenders withdraw any time
Lenders burn their avUSDC shares to redeem USDC + accrued interest. Withdrawals are limited by available (non-deployed) liquidity.
The Vault (AvocadoVault)
The vault is a standard ERC-4626 tokenised vault. Depositors receive avUSDC shares that represent their proportional claim on all assets inside the vault — including interest earned.
Share price starts at 1.000000 and increases as interest accrues. Depositing 100 USDC when share price is 1.05 gives you ~95.24 avUSDC. Redeeming those shares later at 1.10 returns 104.76 USDC.
Key vault functions
deposit(assets, receiver)Deposit USDC, receive avUSDC shareswithdraw(assets, receiver, owner)Burn shares, receive USDCredeem(shares, receiver, owner)Burn exact shares, receive USDCconvertToAssets(shares)Preview USDC value of sharestotalAssets()Total USDC owned by vaultsharePrice()Current price per avUSDC share × 1e6Lending & Borrowing
The AvocadoLending contract manages credit lines for World ID-verified borrowers. Each verified human gets exactly one credit line — enforced at the contract level via nullifier hashes.
Up to $1,000 USDC
Credit limit
per verified human
Variable APR
Interest rate
based on utilisation
None required
Collateral
World ID is the collateral
Interest rate model
The borrow rate adjusts dynamically based on vault utilisation (deployed / total assets). Low utilisation → lower rates to attract borrowers. High utilisation → higher rates to incentivise repayment and attract new lenders.
Rates are indicative and set by the governance parameters in the smart contract. Always verify current rates on-chain before borrowing.
World ID Verification
World ID is a privacy-preserving proof of personhood system. Users prove they are a unique human without revealing any personal information — no name, no email, no biometric data is stored or transmitted to Avocado Fund.
Orb or device verification
Get verified at a World ID Orb (biometric, highest assurance) or via the World App (device-level verification). This is a one-time process.
Generate a ZK proof
When you visit the Borrow page, your World App generates a zero-knowledge proof that you are a unique human. This proof is verified on-chain.
Nullifier hash
A unique nullifier hash is stored on-chain for your identity. This prevents the same person from opening multiple credit lines — without linking to real-world identity.
Credit line activated
Once verified, your credit line is instantly activated. No waiting, no approval process.
Your World ID proof is verified entirely on-chain by the AvocadoLending contract. Avocado Fund never sees your World ID credentials — only the proof that you are unique.
Yield & APY
All yield is real — it comes from borrower interest, not token inflation or subsidies. APY is variable and reflects real-time utilisation of the vault.
APY calculation
grossInterest = borrowedAssets × borrowAPR × (seconds / 31536000)
netInterest = grossInterest × (1 − performanceFeeBps / 10000)
lenderAPY = netInterest / totalAssets × 100
Interest accrues per second. The share price increases continuously as borrowers repay. There is no staking or claiming — your avUSDC shares automatically appreciate.
APY is variable. If utilisation drops (more repayments, fewer new borrows) the displayed APY will decrease. Historical APY charts are available on the Analytics page.
AVO Token
AVO is the native reward token of Avocado Fund. It is earned by staking avUSDC vault shares, distributed via airdrops, and used as the incentive layer for all earn programs.
AVO is not a governance token and carries no rights beyond being a reward. All yield is sourced from real borrower interest — AVO emissions are an additional incentive on top of base yield.
Staking Rewards
The VaultRewards contract distributes AVO tokens to users who stake their avUSDC vault shares. The emission rate is dynamic — it decreases as TVL grows, keeping the reward APY stable regardless of pool size.
Dynamic emission formula
effectiveRate = baseEmission × scaleFactor / (totalStaked + scaleFactor)
baseEmission ≈ 15.85 AVO/second (~500M AVO/year at zero TVL)
scaleFactor = 1,000,000 avUSDC (when TVL hits $1M, emission halves)
As TVL grows, the per-unit emission decreases automatically. This prevents dilution and maintains a healthy reward rate for early and late depositors alike.
Deposit avUSDC into the vault first
You must have avUSDC shares from depositing USDC into the AvocadoVault.
Approve avUSDC for the rewards contract
Approve the VaultRewards contract to transfer your avUSDC shares.
Stake avUSDC
Call deposit() on VaultRewards. Your avUSDC is locked and AVO accrues per second.
Claim AVO rewards
Call claim() at any time to receive accumulated AVO to your wallet.
Unstake to withdraw
Call withdraw() to get avUSDC back. Pending AVO is auto-claimed on unstake.
For Lenders
Supply USDC to earn passive yield. No lock-up period, no liquidation risk. Your position is represented by avUSDC shares.
Connect your wallet
Connect an Arbitrum-compatible wallet (MetaMask, Coinbase Wallet, Rainbow, etc.) using the Connect Wallet button in the top navigation.
Get USDC on Arbitrum
Bridge USDC to Arbitrum using the official Arbitrum Bridge or Coinbase. The vault accepts native USDC on Arbitrum.
Approve and deposit
Enter an amount on the Vault page → Supply tab. First-time depositors will need to approve the vault contract to spend USDC. The approval and deposit can happen in one flow.
Monitor your position
Your avUSDC balance and USDC value are shown in real-time on the Vault page. Analytics shows historical APY and vault health.
Withdraw any time
Switch to the Withdraw tab, enter an amount (up to your maxWithdraw), and confirm. You receive USDC + accrued interest immediately.
Withdrawals are limited by available liquidity (non-deployed assets). If utilisation is very high, some of your position may be temporarily illiquid until borrowers repay. The maxWithdraw value shown in the app reflects this in real time.
For Borrowers
Borrow USDC without collateral using your World ID proof of personhood. Designed for real humans with real use cases — not bots or sybil attacks.
Get World ID verified
Download the World App and complete device or Orb verification. Orb verification unlocks higher credit limits.
Connect your wallet
Connect the wallet you want to receive USDC into. This wallet will be linked to your World ID nullifier — use a dedicated wallet for borrowing.
Verify on the Borrow page
Go to Borrow → Verify Identity tab. The World ID widget will prompt your World App to generate a proof. Approve it — this sends a ZK proof to the contract.
Draw your credit line
Once verified, the Borrow tab activates. Enter an amount up to your credit limit and confirm. USDC is sent to your wallet immediately.
Repay to restore credit
Use the Repay tab to repay part or all of your balance. Full repayment restores your full credit limit for future use. Interest accrues per second until repaid.
Failing to repay may result in your wallet being flagged on-chain and your credit line suspended. Smart contract enforcement is automatic and irreversible.
Security
Non-custodial
All USDC is held by the smart contracts. The protocol deployer has no ability to withdraw user funds.
Open source contracts
All contract code is publicly available on GitHub. Verify every function yourself before interacting.
Vault cap
Deposits are capped at $5M to limit protocol exposure during early operation. The cap may increase post-audit.
Reentrancy protection
All state-mutating functions use OpenZeppelin's ReentrancyGuard to prevent reentrancy attacks.
World ID sybil resistance
Nullifier hashes prevent the same human from opening multiple credit lines, even with multiple wallets.
Performance fee
A 10% performance fee on interest is the only revenue mechanism. There are no hidden fees or dilution.
Smart contracts are open source and undergoing a formal audit with Omniscia (submitted March 2026). Report will be published publicly upon completion. Only deposit amounts you are comfortable with. The vault cap limits total protocol exposure.
Frequently Asked Questions
Is Avocado Fund audited?
Smart contracts have been internally reviewed and are fully open source on GitHub. A formal external audit is in progress with Omniscia (submitted March 2026). The report will be published publicly upon completion. Only deposit what you can afford to risk.
What chain is this on?
Avocado Fund is deployed on Arbitrum — an Ethereum L2 rollup. Gas fees are very low (typically under $0.01). You need ETH on Arbitrum for gas and USDC on Arbitrum to supply.
Can I lose money as a lender?
Yes — in theory. If borrowers default and the total bad debt exceeds available reserves, lender funds could be at risk. The vault cap, credit limits, and identity gating are all designed to minimise this risk. Lending to uncollateralised borrowers always carries some credit risk.
Why does my maxWithdraw show less than my balance?
Your maxWithdraw is capped by available (non-deployed) liquidity. If the vault is highly utilised, some of your balance is lent out. As borrowers repay, your withdrawable amount increases. Check the utilisation rate on the Analytics page.
How does World ID verification work technically?
World ID generates a Groth16 zero-knowledge proof that you are a unique human. The AvocadoLending contract calls the World ID verifier contract on Arbitrum to validate the proof on-chain. A nullifier hash (derived from your identity) is stored to prevent reuse — with no link to any personal data.
Can I have multiple credit lines with different wallets?
No. The nullifier hash derived from your World ID is stored on-chain and linked to one credit address. Attempting to verify with the same World ID on a different wallet will fail at the contract level.
What happens if I don't repay my loan?
Interest continues to accrue, increasing your debt. If your outstanding debt exceeds your credit limit, the contract may suspend your ability to draw further. On-chain bad debt affects the overall vault and can reduce lender yield.
What is the performance fee and where does it go?
10% of all interest earned is taken as a performance fee, sent to the protocol treasury address at the time interest is collected. The remaining 90% accrues to lenders via share price appreciation.
Is there a token?
Yes — AVO is the native reward token (ERC-20, 1B max supply). It is earned by staking avUSDC vault shares and distributed via airdrops. AVO is not a governance token and carries no voting rights. avUSDC is a separate yield-bearing receipt token representing your vault deposit. All base yield is sourced from real borrower interest — AVO emissions are an additional incentive on top.
How do I get support?
Open an issue on GitHub or reach out via the community channels linked in the footer. For security disclosures, please use responsible disclosure by emailing the security contact in the repository.
Ready to start?
Supply USDC to earn yield, or verify with World ID to access a credit line.