Discussion: Add liquidity mining rewards for borrowing mSOL-SOL on Solend

Solend is the largest lend-borrow market on Solana, with over 240M USD of liquidity on mSOL and SOL combined. I propose adding 85,000 SBR of incentives to be distributed over the course of 1 month for borrowing mSOL-SOL LP on Solend, in order to increase the base interest rate of Saber mSOL-SOL LP.

With the current Quarry rate of 47K SBR/day, we would need ~2% of the TVL ($2M) to be in Solend in order to be more capital efficient than Quarry for liquidity mining rewards. Taking just 10% of the mSOL-SOL market share of Solend could give us 25M USD of TVL, meaning that this would be ~12x more capital efficient than today’s mSOL-SOL emissions.

This proposal is identical to the USDC-USDT proposal and I think it is a good one. :slight_smile:

6 Likes

Quick question about this kind of proposal. If Saber implements liquidity mining to incentive the borrowing of pools on Solend. We agree that Solend is a free market and therefore borrowed LPs will be LPs deposited by other users. Since borrowing rates are incentivized, they are lower than deposit rates or even negative. It will therefore be possible to make loops, I deposit 10 lp usdc-usdt, I borrow 7.5, I redeposit them etc. The maximum borrowing rate on Solend being 75% and the borrowing asset being peg to the collateral asset, the user will have every interest in making a loop with the maximum borrowing rate. This means that with 1 lp created and then deposited, he will be able to borrow the equivalent of 4 and therefore over-benefit from liquidity mining without creating more lp tokens and therefore without bringing more liquidity to Saber. What do you think?

If someone does this, the base interest rate for saber LPs will increase. This may cause people to move from usdc, usdt, sol, and msol collateral to Saber LPs, which is the goal of these types of proposals.

Nobody should be using raw SOL as collateral. It’s not optimal.

2 Likes

Oh okay, my reasoning was based on the assumption that for a token X if there is a deposit of 1X and the loan of 0.75X this has a neutral effect on borrowing interest rates and lending rates but I have not consulted the formulas used by Solend to set its rates. If this scheme increases the rates then that changes everything and indeed this kind of proposal makes sense