The Lending Liquidity Pool
What’s a Liquidity Pool?
Liquidity Pool is a vault with moni, which the protocol use to provide loans for borrowers. Depositors (lenders) stake SOL to the pool to earn rewards in SOL from an Interest Rate that borrowers pay.
Why Liquidity Pool?
Because it's more efficient to prepare moni in advance, so when some ser with suitable NFT come, the protocol would be able to provide a loan in seconds after the evaluation.
Why else?
Because it’s safer to issue P2Pool loans. If you give moni to some exact ser, then you put all your eggs in one basket. If you unite with other depositors (via Liquidity Pool), then you give hundreds of loans together and earn together.
Who own and control moni?
Liquidity Pool is a decentralised vault being managed by smart contracts. Only specified operations that have been approved by DAO might be processed.
What time I should stake for?
Any you wish. SOL might be staked and claimed back anytime the depositor would like it to be done. Exception – cooldown period, which is a special predetermined time interval needed to secure the financial stability of the protocol.
What are the limits to stake?
No limits. You can stake as much SOL as you like. This amount influence only a portion of the profit you earn. So if you provide 10% of all moni staked in the Liquidity Pool, then you receive 10% of all the accumulated interest rate.
Easy & fair!
To learn more on the topic, you may read how Liquidity Pools work in AAVE / Compound or other classic lending protocols in their white papers. It’s a common and time-tested practice in DeFi. Stay tuned to learn more about the tech side of our NFT loans!
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