What Is Lending Protocol?
A DeFi application that allows users to lend assets and earn yield, or borrow against collateral.
Definition
Lending protocols are decentralized platforms where users can deposit assets to earn interest (as lenders) or borrow assets by providing collateral (as borrowers). Popular examples include Aave, Compound, and Solana-native protocols like Kamino and Marginfi.
How It Works
Lenders deposit assets into pools and earn variable interest rates. Borrowers deposit collateral and can borrow up to a certain percentage (LTV) of their collateral value. Interest rates adjust based on supply and demand. If collateral value drops too far, positions are liquidated.
In Continuum
Continuum L/S tokens are fully composable SPL tokens that can be used as collateral on Solana lending protocols. Deposit your L token on Kamino or Marginfi, borrow USDC against it, and use that USDC to mint more L/S tokens - creating leveraged exposure without Continuum needing native leverage.
Related Terms
Providing more collateral than the value of the loan or position to protect against price volatility.
Assets deposited to back or secure a financial position.
A metric indicating how close a leveraged position is to liquidation.
Forced closure of a position when collateral value falls below required levels.
More DeFi Terms
Get early access to Continuum and trade synthetic assets 24/7 on Solana.
Get Early Access