How does Lending work?

An introduction to the Lending feature on Lend Finance

The Basics:

LEND Assets -> Earn Interest & $LEND!

Lending is the easiest way to earn with the LEND platform. Lenders deposit their crypto assets into lending pools of algorithmically derived interest rate model, to earn competitively high interest rates without the need of being exposed to any centralized risk.

 Supplied tokens can also be locked via the protocol to be used as collateral for borrowing against your assets. This interest comprises of the normal liquidity rewards, and lenders also earn $LEND as a bonus for providing liquidity.

When a user supplies assets to LEND they will receive tTokens as a receipt for their deposit. To learn more about tTokens read the dedicated section here!

Is it Safe? What about Counter-party Risk?

Lend creates pools of algorithmically derived interest rate model based on the current supply & demand for the specific crypto asset. Over collateralization is required to borrow assets. This means users cannot ever borrow more than they have supplied to the protocol. This is done to ensure sustainability and longevity of the ecosystem. When a user borrows using a Lending Pool, they are required to provide collateral in excess to the borrowed amount. This is to cover their loan and to serve as first-loss capital to the Pools, aligning their interests with Lenders.

The amount of collateral required varies between assets as the risk profile is managed by the TENtroller you can read about that here!

Liquidations

Any user borrowing from LEND pools that has their account equity go negative, will be subject to liquidation by other users of the LEND protocol in order to return the user account liquidity back to positive territory. It is a process in which liquidators choose to clear insufficiently collateralized debt in return for the assets supplied as collateral at a discounted price. This process is a necessity to protect and encourage a healthy lending ecosystem. To find out more about liquidations, see here:

🌊pageLiquidations