Solend- The Defi king
Overview
The introduction of cryptocurrency has been giving a big boost to monetary transactions across the globe. And this ease of transferring assets has given birth to a new concept of DeFi or Decentralized Finances. Now people can easily transfer the funds without the middleman i.e. banks and institutions who control money, financial products and services.
Now you don't need to trust any central authority for your money, you don't need to pay huge service fees and do transactions super fast and effectively. This has been possible due to highly secured peer-to-peer financial network protocols, connectivity and software. They are called smart contracts.
Many protocols have been introduced supporting DeFi till now. You can use these protocols for lending and borrowing digital assets that can be used for various purposes like earning good interest, arbitrage trading, taking a loan and many others.
Some protocols are Aave, Compound, solend, and many others .
The problem with some of the DeFi projects is that they are mainly on Ethereum and that's why the transaction cost is huge and the system is slow because of high traffic and block time. And there is where the Solend comes in.
Solend
Solend is a decentralized protocol that helps with lending and borrowing on Solana. It helps you with lending and borrowing digital assets on the Solana blockchain. As Solana is fast and the block time is in milliseconds, this protocol makes things faster and cheaper approx 100 times.
Solend can be used for the following stuff.
- Earn interest- You can earn interest on Solend up to 32% on your assets. There are 6 pools in which you get rewards for providing liquidity to the pool.
- Borrow- You can easily borrow assets by putting something as collateral that charges a certain interest but you also get rewards for borrowing money.
- Leverage Long- If you have taken a long position on any assets or coins you can just get some extra benefits with the protocol.
- Short- You can also use the pool for some short positions by making a good profit just by arbitrage trading.
Liquidity in Solend.
Solend has currently a pool of around $1,000,000,000 in the ecosystem and has over 6 pools. And the people have borrowed over $300 Million worth of assets.
History
Solend was launched in June 2021 to simplify the Defi space by making the process faster and cheaper.
They currently have 5 core team members in the protocol.
3. 0xodia
4. Da Sichuan
5. legocactus
As a fascinating idea, the project has gained a lot of early traction from investors like Dragonfly Capital, Polychain Capital, Race capital, Coinbase, Alameda Research, Solana Foundation, Epsilon, Petrock Capital, Satni Kulechov, Antonio Juliano, Balaji Srinivasan, Hart Lambur, 0xMaki, Julian Koh, DFCGod.
Recently the Solend has also come up with two new concepts called cTokens and Isolated pools.
cTokens
cTokens are tokens that have been introduced by Solend with amazing benefits. With cTokens, you can just earn some interest on your asset while using its value. It's a wrapped token with the same value and same properties but the advantage is you can still you the cToken across the Defi system.
Let me explain to you with an example: Suppose you have 1 Sol in your Solana wallet, let it be Sollet or Phantom. You can just put your 1 Sol into the solend protocol and get 1 cSol in exchange for your 1 Sol in your wallet and the dashboard. Now you have 1 cSol which has the same amount of value that 1 Sol has. That 1 cSol can be used across the defi ecosystem. You can transfer them, you can stake them, you can use them for purchases but the only difference is that you will get interested.
Important stuff to note is that, if you send some of your cToken to another person the other person will earn interest on cToken that has been sent by you.
How to Mint and Redeem these cTokens.
Minting and redeeming these cToken is as simple as any other transaction in the Defi ecosystem.
Here is the Step-by-Step Guide that will help you to do the process seamlessly.
- You need to go to https://solend.fi/ctokens or Go to Solend main website (www.solend.fi), click on the cToken button.
2. Connect your preferred wallet to the protocol.
3. The protocol will show your assets or tokens as follows.
4. Select the token you want to convert into cToken. ( In the case below I have to use the Sol).
5. Choose the amount you want to convert into cToken.
6. Click on the Mint button and Approve the transaction from your wallet.
7. Count till five and done. You have successfully minted cToken. Refresh the Website and the minted Sol will be shown in your wallet and on the website.
Redeeming
For redeeming your original assets back you just need to do the same process but this time in Redeem section.
- Go to the cToken page. Select the Redeem option.
- Choose the amount of cToken you want to redeem.
- Approve the transaction.
- And you have your original assets/token back with some interest in your wallet.
Now as we have learned how to mint and redeem the cToken, let me tell you about some plans for these cTokens.
The introduction of cTokens opens up a lot of possibilities for developer integrations. Since cToken is just the regular SPL token it is compatible and can be used across the ecosystem. You can use the cToken as a regular token on the blockchain. In simple words, an asset let's say SOL and cSOL have similar features, similar values and the same functions SOL.
This applies to all the tokens that are on the solend protocol.
Isolated Pools
Isolated pools in simple words are separate markets that are used for a specific purpose by separating the assets from the main market. In the normal cross collateral pools, we can borrow the assets against any other assets but with isolated pools, we use them for a specific purpose.
Why do we need isolated pools?
You know listing a new token or asset into the single cross collateral pool is extremely risky as it opens a possibility for a cyber attack. For which, Cream Finance is an example as it has been attacked several times during the listing of new assets and the assets worth $19M and $130M have been stolen.
So isolated pools can act as a method to separate new tokens or assets from the main cross-collateral pool. Isolated pools are not the permanent solution to stop these attacks, but it dilutes the risks by making them separate from the main pool.
At Solend there is only one global cross-collateral pool which is for lending and borrowing assets. But recently the protocol has launched some isolated pools for different purposes.
Currently, Solend has 5 Isolated pools that are used to quarantine different assets from the main pool.
TURBO SOL Pool
The first pool is the TURBO SOL pool. It is an isolated pool that comprises two assets SOL and USDC.
The main feature of this pool is that it has a very high LTV (Loan-to-value). Both SOL and USDC have 90% of LTVs and a Liquidation threshold of 95%.
Invictus Pool
Invictus pool has three assets lsIN, USDC, and UST. in this pool you can lend or borrow all three lsIN, USDC and UST.
Step Pool
The Step pool has 4 assets in the reserve: xSTEP, STEP, SOL, and USDC. You can lend or use them to borrow other assets by giving them as collateral.
Bonfida Pool
The Bonfida pool has 3 assets in reserves: FIDA, SOL, and USDC. You can lend or use them to borrow other assets by giving them as collateral.
Star Atlas Pool
The Star Atlas pool has 3 reserves: ATLAS, POLIS, and USDC. You can lend or use them to borrow other assets by giving them as collateral.
How to use Isolated pools.
The usage of the isolated pool is similar to usage to the main pool
Here is the Step-by-Step Guide that will help you do the process seamlessly. (For this example I am using the Example of TURBO pool but the same process is applicable for Star Atlas, Bonfida, Step and Invictus pool)
- You need to go to https://solend.fi/dashboard or Go to Solend main website (www.solend.fi), click on the Dashboard button and then to TURBO Pool
2. Select the asset you want to Supply in the ecosystem. ( I have used SOL for this illustration.
3. Select the desired amount you want to supply in the ecosystem and click on supply.
- Approve the transaction from your wallet.
And done, you have successfully deposited your assets (SOL in my case) in the system which will give me a 0.48% APY(which depends on the supply and demand).
Borrowing
- Now that we have deposited our assets, we gonna take some assets(USDC) as a loan with the same process.
2. Will click on the assets you want to borrow (USDC) and select the amount you want to borrow (note that you can only borrow less than the value of deposited assets).
3. Then click on the Borrow button, approve the transaction from the wallet and the assets (USDC will show in your wallet)
Risks of Isolated Pool
No cap the isolated pool has a very huge advantage of making some assets quarantine from the main pool that reduces the chances of potential attack but it has one major risk.
Since the lenders in this pool could probably expect higher rates, a reflection of the higher risk. Because of fewer funds, these pools are extremely risky so it's better to do your DYOR before investing in this protocol.
Conclusion
The introduction of Solend has been a great initiative in the Defi space. It not only makes the system smooth by my transaction 100 times faster and cheaper compared to other Defi protocols such as AAVE and Compound. The support that the project has got from the defi community is insane from both investors and users. The project currently has billion dollars in assets and has given a loan of over 350 million dollars. The introduction of tokens and isolated pools have been a great move that has surpassed the other competition in the market.
For Solend it's just the beginning, the project has a great team with amazing vision. Solend has to touch many heights as the Defi system grows more and more. For more information, you can check their Twitter and Discord, the community is super amazing and helpful if you have any doubts, just ping there and someone will help you out.
