Lending & Borrowing
Supply assets to earn yield, or borrow against collateral, through on-chain money markets.
On-chain lending markets let you supply an asset to earn yield from borrowers, or post collateral to borrow against it, without a bank or credit check involved. Rates are usually set algorithmically based on supply and demand for each asset in the pool, so they float — sometimes sharply — rather than staying fixed.
The two things happening simultaneously in every lending protocol are: suppliers earning interest paid by borrowers, and borrowers paying interest to access liquidity without selling their underlying assets. Protocols like Kamino, Save (formerly Solend), and MarginFi run this model on Solana with varying approaches to risk isolation, collateral types, and interest-rate curves.
How to evaluate a lending protocol
- Collateral factors and liquidation thresholds. These determine how much you can borrow against a given asset and at what point you get liquidated if its value drops. Conservative thresholds protect borrowers from cascading liquidations in volatile markets.
- Isolated vs. shared pools. Some protocols isolate riskier assets into separate pools so a bad asset can’t drain the whole protocol’s liquidity. This matters more the more exotic the collateral you’re using.
- Oracle design. Lending protocols depend on price oracles to know when to liquidate. Oracle manipulation has caused real losses across DeFi; protocols using well-established oracle providers with manipulation-resistant pricing are meaningfully safer.
- Audit history and time in production. Lending code is high-stakes — prefer protocols with a real audit trail and a track record through at least one volatile market cycle.
The main risk: liquidation
If you borrow against collateral, a market move against you can trigger automatic liquidation, often with a penalty on top of losing your collateral. This is the single most common way people lose money using lending protocols — not hacks, just under-collateralized positions in a falling market. Read our guide to lending risk and liquidation before you borrow anything.
If you just want to lend a stablecoin for yield, our guide to lending USDC on Solana walks through the mechanics without the borrowing side.