Solend is a decentralized lending and borrowing protocol built on Solana. It is lauded for expanding the methods available for Solana users to boost financial gains. Filling a large gap in the Solana ecosystem, Solend drew a staggering $100 million in deposits in just over a month post-launch.
Related: DeFi lending and borrowing, explained
Solend rode the high scalability of the Solana blockchain, which had built its reputation for being fast and with low transaction fees. The arrival of Solana meant users could use their capital efficiently by lending and earning interest, using the funds lying idle to earn profits from a plethora of opportunities. In line with the philosophy behind decentralization, Solend is a community-driven project where voters collectively make decisions.
This article explores Solend and its workings, including lending and borrowing, earnings and rewards, creation of pools, associated risks, the whale issue and other related concepts.
What is Solend?
Solend is an autonomous lending and borrowing platform that enables users to borrow or lend assets on the Solana network. An algorithm determines interest rates and collaterals on the protocol, allowing users to earn interest and leverage crypto assets long or short on the platform. SLND, the native token of Solend, provides exposure to Solana’s decentralized finance (DeFi) market.
When Solend launched in August 2021, its total value locked (TVL) was less than $20 million. Around three months later, its TVL skyrocketed to approximately $1 billion. Solend hopes to be the largest DeFi lending and borrowing protocol on the Solana network.
Previously, Solend was prototyped as part of the June 2021 Solana Season Hackathon, which it won. The success catalyzed the project to walk into the world of DeFi as a lending protocol.
How does Solend work?
At its core, Solend allows users to engage in decentralized lending on the Solana network. Users deposit assets to their accounts on Solend and earn interest. Moreover, they can also collateralize their deposits to get loans without justifying their means to repay.
An autonomous app, Solend eliminates the need for borrowers to go through a complex underwriting process to determine the financial risk for an institution when sanctioning a loan. They could easily take long and short-term loans, as all processes are self-propelled thanks to smart contracts that factor in a multitude of clauses for setting up borrowing limits and collecting interest.
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