Who Needs Permission?

Market Meditations | August 18, 2022

Many Defi proponents equate permissionless to true decentralization. Uniswap brought permissionless pools of assets to crypto, making digital assets more easily tradeable. Some creative lending markets have copied the model on Ethereum, and now Solend is bringing the trend to the Solana Network.

  • Typically the team behind the protocol decides what is and isn’t a lendable asset.
  • SOL, USDC, wBTC, and more make up the 21 whitelisted lending pools worth $471 million in borrowable dollars currently on Solend. Whitelisted lending pools are vetted by the team to eliminate any scammers and are covered by Solend’s treasury insurance fund.
  • Permissionless pools can pose more risk than whitelisted pools, so be sure that you trust the pool creator before blindly jumping in.
  • Aside from liquidity issues, some risks include data oracle issues (resulting in a faulty price) and malicious tokenomics.
  • Anyone with 100 Solend can create a pool. Pool creators take 20% of fees paid by borrowers, so researching the pool creator is a good idea as well.

Solend is no stranger to the problems that can arise for a protocol when trying to uphold ‘Defi values’. Earlier this year they received widespread criticism for governance proposals regarding the liquidation of the largest lender on Solend when one whale’s position threatened the entire protocol. When choosing to invest in decentralised exchanges, always exercise extra due diligence and never risk more than you can afford to lose.