What To Know About Solend (Solana Network)
There are a few things to know about Solend, which can contribute to making a better decision in the world of cryptocurrency.
Solend is a Decentralized finance (DeFi) lending and borrowing platform on the Solana network, It is noted globally for its high scalability and composability.
Crypto lending/borrowing platforms are platforms that allow users to borrow and lend cryptocurrencies for a fee – the interest.
A good understanding of what crypto lending and borrowing platforms are and how
they operate will make you know that trading crypto is not the only way to make money on
the blockchain.
Read Also: Intercession Of Artificial Intelligence And Blockchain Technology.
This article will focus on:
1. what is solend?
2. how does it works?
3. how to benefit from it?
4. the risks involved.
5. the future of Solend.
Perhaps you do not have an idea of the concept of lending and borrowing in crypto yet, This article will
also, give you a general idea of crypto lending platforms.
What is Solend?
Solend is an autonomous lending and borrowing platform launched in August 2021 on the
Solana network enables users to lend and borrow assets on the platform.
Solend has grown into one of the leading lending and borrowing platforms riding on the high scalability of
the Solana blockchain, which is known for fast processing and low transaction fees.
How does Solend Work?
Crypto lending and borrowing, in general, involves three parties: the lender, the borrower, and
the DeFi platform which serves as the intermediary.
Solend is no exception to this, in this case, the DeFi platform is Solend built on the Solana network. Users deposit assets to their accounts on Solend, which can be collateralized to get loans, or the deposit could be lent for
which they earn interest.
To lend or borrow on Solend, users require a Solana wallet with enough funds to pay the
gas fees in the native cryptocurrency of Solana, SOL, to access the functions of the
network.
One interesting thing about Solend is the fact that the number of crypto tokens the
platform supports is steadily growing, this gives users the opportunity to leverage a broad array of crypto assets.
Before lending or borrowing can be done on Solana, their Solana wallet must be
connected to the platform and ‘recharged’ with SOL. Once this is done, users can
lend or borrow various types of crypto.
The SUPPLY option lets the user see how much they can earn, while the BORROW option lets the user know how much they can borrow.
Read Also: Binance Adds Terra UST Classic (USTC) In The List Of Borrowable Assets On Binance Crypto Loan
How to benefit from Solana?
Solend offers a platform that you can leverage to your benefit. Within healthy limits, one can
benefit both from lending and even borrowing on Solend.
The lender earns interest based on annual percentage yield, just like in conventional lending, but in addition to this, Solend also gives additional rewards in the form of SLND tokens, which are the native tokens of
Solend.
Borrowing from Solana can also be very beneficial as long as necessary care is taken
as regard the risks involved.
Risks involved in using Solana
Although the platform has some great advantages for the user and an edge over many other
such platforms, using it also comes with some potential problems.
Here are a few risks you need to be aware of.
- Smart contract Risk
Inherent in every smart contract is the risk of potential exploitation as they can be
vulnerabilities.
Such risks can not really be fully eliminated and as such Solend has set in place some methods to mitigate this. Such include the audit that Solend’s smart contract underwent by an independent security firm known as the Kudelshi group, the big bounty program which offers up to $1 million for any user that identifies a critical vulnerability in the
code(an incentive to encourage disclosure rather than hacking into the system) etc.
100% Utilization Risk If there are no assets to left in the pool, any future withdrawal or borrowing becomes
impossible.
This is called 100% Utilization Risk And it is also a risk in borrowing with Solend.
this problem is resolved if more users supply assets to the pool or the user pays back their
Read Also: Bitcoin Relinquish Below Ascending Channel to $38,000, Liquidations Spike to $200 Million
loans.
- Liquidation Risk
The value of the asset used as collateral may drop in value (because its value is
constantly changing due to the volatility of these assets), this places the user at risk of
liquidation of funds.
- Risks due to wrong feeds by oracles
Oracles reporting the wrong feed could play havoc on Solend. These oracles
reporting incorrect prices would result in wrongful liquidations which could lead
eventually to bad depth.
The future of Solend
Solend has had some difficult times in the past, especially with the whale( a whale is a
large, single-borrower) the issue that happened in June 2022.
The way this issue was
resolved has raised the hope of many as regards the long-term credibility of Solend.
The world of crypto is extremely dynamic, notwithstanding, the various protocols
that have been put in place to prevent such occurrences in the future and the
continuous improvements in the network make many stakeholders express hope
that Solend is not about losing its relevance any time soon.
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Meet Daniel Abang: Crypto guru, content creator, and analyst. With a deep understanding of blockchain, he simplifies complex concepts, guiding audiences through the ever-changing crypto landscape. Trusted for his insightful analysis, Daniel is the go-to source for staying informed and empowered in the world of cryptocurrency.
