Lending Pools

Overview

Lending Pools on Lendscape are specialized pools focused on specific asset types or risk profiles. Key features include:

• Direct matching of lenders to borrowers

• Customized risk-return profiles

• Transparent loan terms and collateral information

Interest Rate Structure

Lending Pools use a more granular interest rate model compared to the Master Liquidity Pool:

1. Base Rate: Set by pool governance based on the asset class.

2. Borrower-Specific Rate: Adjusted based on the borrower's credit score and collateral quality.

3. Duration Premium: Longer loan terms may offer different rates.

4. Collateral Factor: The loan-to-value ratio influences the interest rate.

The formula might look like:

textInterest Rate = Base Rate + Borrower Risk Adjustment + Duration Premium + Collateral Factor

Rates are typically higher in Lending Pools compared to the Master Liquidity Pool due to the increased risk and specificity of loans.

Risk Management for Lenders

Lendscape implements several measures to manage risk for lenders in specific Lending Pools:

1. Collateral Over-collateralization: Loans are typically over-collateralized (e.g., 300% LTV) to provide a buffer against price fluctuations.

2. Liquidation Thresholds: Automatic liquidation processes are triggered if collateral value falls below a certain threshold (e.g., 250% LTV).

3. Insurance Fund: A portion of interest payments is allocated to an insurance fund to cover potential defaults.

4. Diversification Limits: Lenders are encouraged to spread their investments across multiple loans within a pool.

5. Real-time Monitoring: Blockchain oracles provide continuous updates on collateral values and loan health.

6. Secondary Market: Lenders can trade their loan positions on a secondary market, providing additional liquidity options.