Solend is a blockchain technology loan contract based on Solana. It has been praised for expanding the ways available to Solana users to boost accounting profits. Solend fills a big gap in the Solana ecosystem, attracting a surprising $100m in savings a little more than a month after its launch.

Solend takes advantage of the high scalability of the Solana blockchain, the latter of which is known for its speed and high transaction fees. The advent of Solana means that users can make efficient use of their assets by borrowing and earning interest on loans, and make a profit from many opportunities by using idle assets. In line with the core philosophy behind the government procurement process, Solend is a community-driven new project, with electoral groups making decisions.

This paper discusses Solend and its mode of operation, including borrowing, return on investment, construction of capital pool, related risks, whale problems and other related definitions.

What is Solund?

Solend is an independent online lending platform that allows users to raise money or lend assets on the Solana. An optimization algorithm defines the collateral of the interest rate in the agreement, allows the user to obtain loan interest, and encrypts assets with double or empty single data in the platform. Solend's local label SLND brings an open decentralized financial (Defi) market to Solana.

When Solend was released in August 2021, its total lock-up (TVL) was less than $20 million. About three months later, its TVL soared to about $1 billion. Solend hopes to become the largest Defi loan and loan contract for Solana on the Internet.

Previously, Solend was prototyped as part of the June 2021 Solana Season Hackathon and won the event. This success has pushed the project into the DEFI world as a loan agreement.

How does Solend work?

The key to Solend is to allow users to make piecemeal loans on Solana. Users deposit assets into their Solend accounts and earn interest on loans. In addition, they can pledge their savings to obtain loans without having to prove that their repayment methods are reasonable.

Solend is an independent application software, lenders do not need to go through the complicated underwriting process to determine the operational risk of the institution when granting loans. They can easily get long-term and short-term loans because the whole process is fully automated, which should benefit from smart contracts, which include many provisions on setting loan restrictions and deducting interest.

How data encryption loan works on Solana

For loans in Solend, users need a Solana wallet with enough money to pay for gas. He needs Solana's local digital currency SOL to access the server role.

Users can also raise money or lend digital currency on the appropriate software. The total number of login passwords encouraged by the site has continued to grow. This allows users to use a wide range of data to encrypt assets, including original ecological coins, stable coins and commemorative gold coins, enhancing the versatility of the platform. The whole process of sale is managed by the community, which is consistent with the development concept of DEFI.

Before users can raise money or lend out data encryption assets, they need to transfer their Solana wallets to the service platform and import Sol into his account. The user can query the small details of his transaction through the account control panel.

Income reward incentive

Lenders not only receive interest on loans based on annualized yields, similar to traditional loans, but also receive additional rewards in the form of SLND tokens, the local tokens of Solend.

Swimming pool

Solend has one of the most important pools of working capital around the world, with several relatively small independent and approved pools. Reliable saints and more liquid tokens can be enumerated in the pool. However, most of the dynamic passwords are listed in the protective birdsong stream and then transferred to the main pool.

The protective pool is mainly used to sell tokens, which has low liquidity and great uncertainty. Apply the administrative authority pool, and everyone can establish a protection pool on the contract.

The founder of the protection pool receives 20% of the departure fee generated by the special pool. The tokens available in the tokens catalogue and their set trading volume will appear on the page. After all the main parameters are met, the user must click the "Create Pool" button to establish the pool.

Account control panel

The account control panel is visually enjoyable and visual, and you can do it without going through a large number of example tutorials. The control panel has a "supply" option to inform users that they can earn interest. On the other hand, the "raise funds" option tells users that they can also raise money based on the login password assets they hold.

The red bar on the account board indicates the threshold for the settlement of each loan received by the user. If the value of the pledged asset decreases and the loan exceeds the liquidation threshold, the system can liquidate the user's assets and deposit the funds with the lender.

How does Sorund make money?

Solend itself earns money by levying agreement fees on loans. The fee could also boost the site's social security fund. Users can quickly use and sell data encrypted assets without paying too high transaction fees. Solend's Ministry of Finance provides commercial insurance for assets in the pool to prevent any system vulnerabilities or hackers.

Risks related to the application of Solend

When talking about the obvious role of Solend, there are some risks in using these:

Oracle bone inscriptions are fed with the wrong concentrate feed.

An erroneous summary of the oracle bone report may cause damage to Sorunde. The price feedback from Pyth Network and Switchboard caused liquidation in the platform. Such saints reporting the wrong price may lead to incorrect liquidation.

On November 2, 2022, Sorunde did encounter Oracle's use, resulting in a loss of $1.26 million in bad debts. The pool was banned and the address of the exploiter was contacted with the trading center.

Vulnerability of intelligent contracts for blockchain

Another possibility is the risk of block chain smart contract defects or system vulnerabilities. Solend is an optimization algorithm, a fragmented agreement, and all common failures of blockchain smart contracts can lead to asset theft or permanent damage.

Asset utilization rate 100%

Like every debt pool, the risk scenario is 100% capital utilization. If there are no assets left in the pool, one cannot accept a loan. This problem is called 100% utilization. However, if the lender continues to repay the loan, or if a new supply continues to arrive, there is likely to be no such problem.

Preferential price

There is also a risk that may be related to liquidation. Although Solend gives too many pledged loans, people should not forget that the login password market is unstable and the fluctuation in the use value of assets may lead to the liquidation of unguarded user funds. This also makes everyone should pay close attention to their own loans and investments.

Large amount, single lender

As a large loan pool, one of the key drawbacks of Solana is the existence of a large single lender known as the whale. Whales make up too much of the agreement. This led to the collapse in June 2022, involving a whale lender.

In June 2022, a whale using a $108 million Solana nearly crashed the Solana network. The agreement made do to prevent the liquidation of 95 per cent of SOL deposits in its loan pool. It allows us to explore more deeply how all this happened.

The whale has significant outstanding loans for $108 million in USDC and USDT, as well as strong support for its use of $170 million worth of Sol collateral. When Sol's price was very high, everything was fine, but when he plummeted on June 15th, the whale's account faced liquidation. This could lead to the sale of more than $21 million Sol, causing a serious reaction in the market.

The developers of the new project tried to contact the whale, but to no avail. They were forced to post on Twitter and Reddit, urging the whale to contact them, which scared many other users, and she began to withdraw his assets. The real estate developer finally managed to reach the whale, and the latter enhanced a lot of collateral.

However, before the whale upgraded the collateral, the real estate developer-in order to control the hazard-gave emergency rights to control the account in the case of liquidation. This gives it negative news because it violates the spirit of struggle in the government procurement process. The final solution is to set the limit on lenders to $50 million.

Solund's future.

Solend brings the energy of Defi to the Solana network, which brings a lot of good opportunities for users to improve efficiency. Although the whale puzzle exposes the vulnerability of the agreement, the glimmer of hope is the developer's ability to deal with the problem. Login password is still a new industry, which we all learned in the movement. The successful resolution of the whale problem to the satisfaction of most stakeholders has enhanced the credibility of the Protocol.

In addition, Solend adds strong Defi elements to the Solana ecosystem. Although there are system vulnerabilities, but this application is very memorable, but with the blocking of system vulnerabilities, more users may find it very exciting.