Liquidity Pools

A liquidity pool is a market instance within LendOS that allows users to participate as either suppliers or borrowers. Each pool is defined by parameters, such as reserve settings and collateralization limits, that are approved through governance. Suppliers add liquidity to the pool, which borrowers can access by securing overcollateralized positions. In exchange, suppliers earn interest, while borrowers can access funds by pledging collateral, all managed through decentralized smart contracts.

LendOS liquidity pools function on a blockchain network, with parameters determined by governance decisions that define chain and reserve settings. These decisions aim to balance liquidity demand with effective risk management. Smart contracts validate and enforce these parameters, facilitating actions like borrowing, repaying, and liquidations without the need for intermediaries. This decentralized model improves the transparency, efficiency, and security of financial interactions within the pool.