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Lending Pools

Overview​

Lending Pools are specialized liquidity pools within the Lendscape Protocol that focus on specific asset types or risk profiles. These pools enable direct matching between lenders and borrowers, offering higher potential yields in exchange for more concentrated risk exposure.

How Lending Pools Work​

Lending Pools operate on a simple but powerful principle:

  1. Pool Creation: Each pool is created with specific parameters:

    • Asset class focus (e.g., SAFT, tokenized equity)
    • Risk profile
    • Target interest rate range
    • Collateralization requirements

  2. Liquidity Provision: Lenders deposit funds into pools matching their risk appetite and return expectations.

  3. Borrower Matching: Borrowers apply for loans from specific pools that accept their type of collateral.

  4. Loan Origination: When a match is found, the smart contract facilitates the loan creation:

    • Borrower provides collateral
    • Lender's funds are transferred to borrower
    • Loan terms are recorded on-chain

  5. Lifecycle Management: Throughout the loan term, the pool smart contract manages:

    • Interest accrual and collection
    • Collateral monitoring
    • Repayment processing
    • Default handling

Lending Pool Types​

Lendscape offers several specialized lending pools, each with unique characteristics:

SAFT Pool​

The SAFT (Simple Agreement for Future Tokens) Pool focuses on loans collateralized by SAFT agreements from blockchain projects.

  • Risk Profile: Medium-High
  • Expected Returns: 20-30% APY
  • Typical LTV Ratio: 30-40%
  • Average Loan Duration: 6-12 months
  • Minimum Investment: $10,000
  • Key Benefit: Exposure to pre-launch token projects with significant upside potential

Equity Token Pool​

The Equity Token Pool specializes in loans backed by tokenized equity in startups and growth companies.

  • Risk Profile: Medium
  • Expected Returns: 15-25% APY
  • Typical LTV Ratio: 40-50%
  • Average Loan Duration: 12-24 months
  • Minimum Investment: $5,000
  • Key Benefit: Access to equity-backed loans with more stable valuation metrics

RWA Pool​

The Real-World Asset Pool accepts various tokenized real-world assets as collateral.

  • Risk Profile: Low-Medium
  • Expected Returns: 12-20% APY
  • Typical LTV Ratio: 50-60%
  • Average Loan Duration: 3-36 months
  • Minimum Investment: $2,500
  • Key Benefit: Higher stability with tangible asset backing

Interest Rate Model​

Lending Pools employ a sophisticated interest rate model that adapts based on multiple factors:

Base Component​

The interest rate calculation begins with a base component that includes:

Interest Rate = Base Rate + Risk Premium + Duration Adjustment + Utilization Factor

Where:

  • Base Rate: The minimum yield required by lenders (typically 5-8%)
  • Risk Premium: Additional return based on pool's risk profile (3-15%)
  • Duration Adjustment: Premium for longer loan terms (0-5%)
  • Utilization Factor: Dynamic component that increases as pool utilization rises

Rate Dynamics​

Each pool's interest rate adjusts based on:

  1. Pool Utilization: As more funds are borrowed, rates increase to incentivize more deposits
  2. Collateral Quality: Higher-quality collateral results in lower rates
  3. Borrower History: Established borrowers may qualify for rate discounts
  4. Market Conditions: External market factors influence the base rate

Pool Governance​

Lending Pools incorporate governance mechanisms that allow stakeholders to influence pool parameters:

  • Parameter Adjustments: Voting on collateralization requirements, interest rate models, and fee structures
  • Asset Acceptance: Deciding which new collateral types to support
  • Risk Management: Setting liquidation thresholds and insurance fund contributions
  • Fee Distribution: Determining how fees are allocated between stakeholders

Governance rights are typically distributed to liquidity providers in proportion to their contributed capital.

Pool Economics​

Fee Structure​

Lending Pools generate and distribute fees through several mechanisms:

  • Origination Fees: 1-2% of loan amount, paid by borrowers
  • Interest Spread: Difference between borrower rates and lender yields
  • Early Repayment Fees: Typically 0.5-1% for loans repaid before maturity
  • Secondary Market Fees: 0.1-0.5% on loan position trades

Distribution Model​

Fee distribution follows this general allocation:

  • Lenders: 70-80% of all generated fees
  • Insurance Fund: 5-10% for default protection
  • Protocol Treasury: 10-15% for platform development
  • Governance Rewards: 5-10% for active governance participants

Integration with Master Liquidity Pool​

Lending Pools interact with the Master Liquidity Pool through several mechanisms:

  • Liquidity Overflow: Excess funds from specialized pools can flow to the Master Pool
  • Liquidity Backstop: The Master Pool can provide emergency liquidity to specialized pools
  • Risk Balancing: The Master Pool automatically rebalances exposure across different Lending Pools
  • Yield Optimization: Smart routing of liquidity to maximize overall system returns

Future Developments​

The Lending Pool system is continuously evolving with planned enhancements:

  • Automated Pool Creation: Allowing users to create customized lending pools
  • Cross-Chain Pools: Supporting collateral from multiple blockchains
  • Leveraged Positions: Enabling leveraged lending strategies
  • Synthetic Asset Pools: Creating pools for synthetic asset collateral
  • Advanced Analytics: Enhanced risk modeling and predictive analytics

For more information on participating in Lending Pools, refer to the Lender Guide or contact our support team.