Probably this is a very dumb question and can be answered with A-Income coming from somewhere else or with B- It’s not sustainable. The question is what’s the strategy of some lending protocols like for instance Solend to provide lower borrowing rates than the lending rates. I understand that things like this allow to create these infinity loops that provide higher APY , but i don’t know how they can afford that or if it’s something that ultimately will end up making them go into a “bankruptcy”.
On the other hand, other plataforms like AAVE (Which i know is the safest and one of the oldest) have some more reasonable rates.. quite low but logical , higher borrowing rates to pay to the lenders and make a profit..
So, what’s the catch and is possible to have a sustainable plataform without the “right” rates. If so, how?
3 thoughts on “Protocols with way lower borrowing than lending”
Typically protocols set aside tokens for this. Just think of it like an on-going airdrop and without those tokens, the rates wouldn’t be as attractive.
In all honesty, I would rather diversify with Spool considering the diversification Spool as it would help automate yield farming and save me from all this stress.
SHDW lending is far needed in many protocols such as francium.io