Lending

Lending transfers purchasing power through time. A supplier gives up current liquidity, a borrower receives current liquidity, and the borrower owes principal plus interest later.

supplier asset → lending system → borrower asset
supplier claim ← lending system ← borrower debt

Collateral and liquidation reduce expected loss; they do not erase credit, market, liquidity, oracle, execution, or contract risk.

Concepts in this family

• Lending pool shows the supplier and borrower sides of pooled credit.
• Collateral separates pledged value from the debt it protects.
• Loan-to-value defines leverage using one valuation unit.
• Health factor explains protocol-specific liquidation coverage scores.
• Utilization and interest rates connect borrowed liquidity to borrower charges and supplier accrual.
• Lending liquidation follows debt repayment, collateral seizure, bonuses, and residual state.
• Bad debt makes an unrecoverable shortfall and its loss bearer explicit.
• Flash loan uses transaction atomicity instead of ordinary collateral.

A reusable lending checklist

For every position, record:

1. supplied, borrowed, collateral, debt, reserve, and claim units;
2. price sources, timestamps, decimals, eligibility, and haircuts;
3. maximum-borrow and liquidation thresholds as separate parameters;
4. interest index, compounding rule, reserve factor, and elapsed time;
5. available cash, utilization, caps, and withdrawal constraints;
6. liquidation eligibility, close limits, bonus, fees, route, and ordering; and
7. the reserve, backstop, supplier, or other claim class that absorbs a shortfall.

No displayed ratio is meaningful without the state and accounting model behind it.