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Lender Risks

Lending risk

Lenders don’t bear risks from impermanent loss and liquidation risks from leveraged positions like the protocol’s leveraged yield farmers. Instead, lenders share the risk of the illiquidity of the pool.

Risk of Illiquidity

Users may not be able to make a withdrawal if liquidity in the lending pool is not enough. This can occur when the asset utilization rate is significantly high. In order to withdraw, either withdraw a smaller proportion or wait until the asset utilization drops.

How Homora V2 helps mitigate risks

Regardless, with risks come solutions too. There are ways that users can protect their assets from the risks mentioned earlier. We have prepared you with the following solutions.

Protection Against Illiquidity 🛡

Homora V2 has partnered with IronBank to adopt the Triple-slope Interest rate model which incentivizes a healthy utilization ratio to mitigate the risk from illiquidity. See more details on IronBank interest rate model here.
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Lending risk
Risk of Illiquidity
How Homora V2 helps mitigate risks
Protection Against Illiquidity 🛡