Abstract
We construct an abstract ledger supporting the risk-free
lending protocol. The risk-free lending protocol is a
system for issuing and exchanging novel financial products we call
risk-free loan. The system allows one party to
lend money at 0% APY to another party in exchange for a good
or service. On every update of the ledger, accounts have interest
distributed to them. Holders of lent assets keep interest accrued by
those assets. After distributing interest, the system returns a fixed
fraction of each loan. These fixed fractions determine loan
periods. Loans for longer periods have a smaller fixed
fraction returned. Loans may be re-lent or used as collateral for
other loans. We give a sufficient criterion to enforce all accounts
will forever be solvent. We give a protocol for maintaining this
invariant when transferring or lending funds. We also show this
invariant holds after update. Even though the system does not track
counter-party obligations, we show that all credited and debited loans
cancel and the monetary supply grows at a specified interest rate.