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Last updated: Aug 16, 2023
Solend is an algorithmic, decentralized protocol for lending and borrowing on Solana, where users are able to earn interest on deposits and borrow assets with minimal fees.
The protocol was developed during the Solana Season hackathon in the summer of 2021. During the development, the Solend and Nope Finance teams decided to merge the projects, after which the project was launched on the mainnet in August 2021. In October, Solend raised $6.5M in a seed round of funding.
The Solend protocol allows its users to deposit assets as collateral for a loan, as well as for the purpose of earning interest income. The interest rate earned on the deposited funds is calculated algorithmically.
Solend currently has 1 main pool with a majority of assets, and isolated pools. Users may create their own isolated pool permissionlessly, or use a preexisting pool. Solend aims to list every SPL asset by isolating risky tokens from each other, and has successfully listed 57 assets so far.
In addition to the borrowing interest rate, there's a protocol origination fee which is charged upon origination of a loan. It is split between a program fee and a host fee. The program fee contributes to Solend's insurance fund. The host fee can be collected by any client host to incentivize the decentralized hosting of clients. Solend fees for most vaults are set to 10 bips (0.1%).
Solend uses two oracles to correctly determine current asset prices. The main one is the Pyth oracle and the backup oracle is Switchboard.
Solend app can be connected to one of the following wallets: Phantom, Sollet, Slope, or Solflare. Once connected, users have access to a dashboard that displays Solend's main pool. It displays the currently available asset markets and the general information such as the pool's total supply, TVL, and SLND token value. Each pool has information about the total supply and borrow, as well as supply and borrow APY. Furthermore, by clicking on their SLND balance on the top left, users can view and redeem their SLND rewards.
«Your account» panel on the right contains all the information about the wallet balance, deposited and borrowed funds, as well as the borrow limit and liquidation threshold. When borrowing, the user must pay attention to the borrow limit, which depends on the type and amount of the asset pledged as collateral. Another important indicator is the liquidation threshold, which is the percentage at which a loan is considered uncollateralized. If a loan crosses the percentage (50 to 80 percent for all current assets), assets that were previously used as collateral will be liquidated and paid out to lenders and the liquidator. Anyone can liquidate a loan that has crossed the threshold and is incentivized to do so with a 5% liquidation bonus.
Each account can have six positions at most. Any supplied or borrowed asset constitutes a position. The attempt to enter more positions would cause the transaction to fail due to the Solana compute limit.
Users can repay or withdraw assets promptly and without any delays.
The Solend native SLND token is a governance token. The total supply of SLND equals 100 million.
The largest portion of SLND, 60% is allocated to the community: half to the liquidity mining program and the other half to the Solend Treasury, owned and governed by the Solend DAO. Then, 5% of the Treasury comes from an IDO held in November, 2021.
Breaking it down further, 25% of SLND is allocated to the core team, and 15% of SLND is allocated to investors. Only 10% was distributed in the seed round, but an additional 5% is set aside for a potential future raise in case it’s needed.
Seed investors have a three-year vesting schedule, with the first third vesting on October 1, 2022, and the rest vesting monthly after that. The team also has a three-year vesting schedule, with the first third vesting on June 1, 2022 or later (based on join date). There is no lockup for IDO participants.
As stated above, half of the tokens reserved for the community will be minted through liquidity mining during three years. SLND is being emitted at a rate of 0.1585 per slot (10M / slots per year, where slots are every 500ms). These rewards are split evenly between supplying and borrowing, and are distributed proportionally according to each market’s weight. To start earning liquidity, the user needs to supply or borrow SOL, USDC, ETH, soETH BTC, USDT, or USDT.
Solend's smart contracts were assessed by Kudelesky Security in September 2021. During the audit four vulnerabilities have been identified, all of which were mitigated by the Solend team before issuing the report. More audits are expected to be ordered in the future in case of major changes. The Solend smart contracts are open source and can be reviewed by the community.
Solend also runs a bug bounty program with a reward of up to $1 million for reporting critical issues and the protocol's treasury holds over $20 million that can be used as insurance for the main pool.
The protocol team members do not disclose their real names, only nicknames: 0xrooter (founder), 0xnope, 0xodia, Da Sichuan, and legocactus.
Solend has raised $6.5M with the help of a number of well-known investors in the industry, such as Polychain, Dragonfly, Coinbase Ventures, Solana Ventures, Alameda Research, and others.
After building out isolated and permissionless pools, Solend is moving towards adding complementary features to it's protocol, such as Margin Trading or Strategies. These features are expected to offer another way of using Solend, mainly to speculate on crypto prices or deploy complex yield strategies with a single click.
The protocol is also expected to go multichain soon.
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Last updated: Aug 16, 2023
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