Last updated: Aug 16, 2023
Soda is an innovative decentralized lending protocol operating on the Solana blockchain with an integrated On-Chain Credit Rating System called Soda ID. This system analyzes the historical behaviors of addresses involved in borrowing and lending transactions and provides a foundation for the application of credit loans, airdrop options, and governance.
The lending platform with an integrated Soda ID credit system establishes users’ credit models through surveying their on-chain behaviors, which in turn optimizes capital efficiency.
Soda Protocol has been made available on the mainnet in November 2021, after successfully completing the Alpha Devnet community test.
The Soda lending system generates profit from the following core activities: basic lending, on-chain credit system, and composability modules.
Soda lending is a liquidity fund pool and it works similarly to other lending protocols like Compound and AAVE. Soda provides flash loans, flash liquidation, arbitrage opportunities, easy repay, and more under an optimized interest rate model for both borrowers and lenders.
The Soda ID collects large amounts of on-chain data and performs a series of operations to generate the profile of an active on-chain user. After the data is analyzed and processed, it is trained and back-tested by machine learning. First of all data labeling is performed on the basis of processed on-chain data as a dataset, then the dataset is divided into Training Dataset, Validation Dataset, and Test Dataset for model training. Data labeling mainly relies on snap-shot results of data-weighted assets, records of active swaps, good history of borrowing and repayments, as well as active farming and other DeFi-related behaviors. The labeled data is secured through Soda data warehouse prior to being released for visualization in the Soda app. Users with higher credit scores benefit from the dynamic loan to value (LTV), reasonable allocation of airdrops, mining incentives, and governance voting weight, as well as from reduced liquidation lines, fines, and service fees. Any other platform can request statistics on user behavior and scoring model results.
For partnered projects, Soda has also designed modular interfaces. Besides acquiring Soda ID data to verify a user’s credit score, they also borrow funds under-collateralized (or credit loans) based on the corresponding credit.
Before proceeding with lending and borrowing on the Soda protocol, a wallet has to be connected. Phantom, Slope, Solflare, Blocto, Solong, Sollet, and Ledger are among the currently supported by the Soda app. As soon as the wallet is connected, the platform shows the available assets and their liquidity, total supply, and borrows along with supply and borrow APY.
After choosing the asset and the amount to be deposited, the user has to approve the transaction in the wallet and wait for the response. As soon as the transaction is finalized, the total and each asset's supply balance can be viewed on the dashboard page. The borrowing and repay&withdraw work on the same pattern. The lending and borrowing interest start to accumulate once the user deposits or borrows. Soda fees are not charged for borrowing and the flash loan fee for all tokens is 0.3%
The Soda team claims they developed a strict security design for the deployment of smart contracts and the front-end environment of the website. Its smart contract upgrades and deployment operations need to be performed via multi-signature to ensure that the contract deployed on-chain, with which the user interacts, is the version that has been audited. Besides, the team claims that all operations on the platform are performed in a secure environment that applies HTTPS encryption, which is supposed to block intermediaries' interference with the transactions.
Soda claims that its team’s core members include industry veterans who have previously worked in traditional internet giants, famous blockchain projects, and institutions like Microsoft, DeBank, BitMax, however in response to DeFi Teller’s request to specify their names, Soda’s representative stated that additional information will be announced along with the release of new products meaning that until then the team will remain anonymous. Soda’s advisors include Mr.Block, a YouTuber who is a prominent blogger in the Chinese-speaking crypto community, and Maggie Wu, CEO and Co-founder of Krypital Group, etc.
Soda has made a strategic partnership with 1Sol expanding the users lending and borrowing options. Another recent cooperation is with Dexlab making launching on Solana easy with a minting lab, a launchpad, and a dedicated DEX for all listings.
Some of the investors that have participated in Soda’s fundraising include Epsilon Trading, Infinity Ventures Crypto, Axia8 Ventures, Crypital group, Drops Ventures and others.
Further on, the Soda team plans on expanding to other public chains like Ethereum, BNB chain, integrate Soda ID into Soda Lending service and make their user data visualization more comprehensive, as well as improve the credit score system.
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