Lending Protocol
A smart contract system where users deposit assets that others can borrow, with interest rates set automatically by supply and demand.
In the pooled design, deposits of one asset go into a shared reserve, and borrowers draw from it after posting other assets as collateral worth more than the loan. The interest rate follows a published curve based on utilization, the share of the pool currently borrowed, so rates rise steeply as the pool empties, which encourages repayment and new deposits. Depositors receive a receipt token that accrues interest, and borrowers are liquidated automatically if their collateral falls below the required level. This is not banking: there is no deposit insurance, no credit assessment, and no recourse to a borrower's other assets or income, so recovery depends entirely on selling the collateral that was posted.
Trong thực tế
Aave and Compound popularized the utilization-curve model, in which the borrowing rate is a published function of how much of the pool is currently lent out.
Hiểu lầm phổ biến
Deposits in a lending protocol are not bank deposits; there is no insurance, and withdrawal depends on unborrowed liquidity being available in the pool.
Con số mà dữ liệu này ánh xạ tới
The dollar value of assets currently deposited in a protocol's or a chain's smart contracts.
Giới hạn: TVL rises and falls with the price of the deposited assets even when nobody deposits or withdraws anything, so a large part of any move is a price index rather than a flow. Double counting is routine: a deposit that mints a receipt token which is then deposited elsewhere is counted in both places,…