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Q101.Solend is the leading lending protocol on Solana. What are the demographics of the Solend userbase?
About Solana
Solana is a highly functional open source project that implements a new, permissionless and high-speed layer-1 blockchain.
Created in 2017 by Anatoly Yakovenko, a former executive at Qualcomm, Solana aims to scale throughput beyond what is typically achieved by popular blockchains while keeping costs low. Solana implements an innovative hybrid consensus model that combines a unique proof-of-history (PoH) algorithm with the lightning-fast synchronization engine, which is a version of proof-of-stake (PoS). Because of this, the Solana network can theoretically process over 710,000 transactions per second (TPS) without any scaling solutions needed.
Solana’s third-generation blockchain architecture is designed to facilitate smart contracts and decentralized application (DApp) creation. The project supports an array of decentralized finance (DeFi) platforms as well as nonfungible token (NET) marketplaces.
Solana blockchain was rolled out during the 2017 initial coin offering (ICO) boom. The project’s internal testnet was released in 2018, followed by multiple testnet phases leading to the eventual official launch of the main network in 2020.
How does Solana work?
The core component of the Solana protocol is proof-of-history, a sequence of computations that provides a digital record that confirms that an event has occurred on the network at any point in time. It can be presented as a cryptographic clock that gives a timestamp to every transaction on the network, along with a data structure that can be a simple addition of it.
PoH relies on PoS using the Tower Byzantine fault tolerance (BFT) algorithm, an optimized version of the practical Byzantine fault tolerance (pBFT) protocol. Solana uses it to reach a consensus. The Tower BFT keeps the network secure and running and acts as an additional tool to validate transactions.
Moreover, PoH can be considered as a high-frequency Verifiable Delay Function (VDF), a triple function (setup, evaluation, verification) to produce unique and reliable output. VDF maintains order in the network by proving that block producers have waited enough time for the network to move forward.
Solana uses a 256-bit secure hash algorithm (SHA-256), a set of proprietary cryptographic functions that output a 256-bit value. The network periodically samples the number and SHA-256 hashes, providing real-time data according to the set of hashes included on central processing units.
Solana validators can use this sequence of hashes to record a specific piece of data that was created prior to the generation of
What is Solend?
Solend is a money market on Solana. Its vision is to become the most secure and easy-to-use lending platform in the Solana ecosystem. Besides that, Solend also takes advantage of the high scalability of its landed blockchain where any transaction is expected to be ultra-fast and dirt cheap.
Solend enables you to use your capital more efficiently by lending to earn interest, borrowing, leveraging long and short. With Solend, Solana players have more options to increase their profits. Some assets that are supported by Solend as of now are SOL, USDC, USDT, ETH, BTC, SRM, FTT, and RAY. More markets will be added soon. Eventually, the listing process will be governed by the Solend community.
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How does Solend work?
Add Text HSimilar to other money markets, Solend offers different markets for users to lend or borrow.
- Lending: Users deposit funds in Solend and earn interest. The interest is set algorithmically.
- Borrowing: After depositing funds, users can use them as collateral to borrow assets.ere
One advantage of lending/borrowing on Solend is that it has an Account Panel, displaying all key figures in lending/borrowing. This helps you track your positions easily and efficiently to avoid any unwanted liquidation.
- Net value: Equals to the value of supplied assets minus the value of borrowed assets.
- Borrow utilization: % of the borrow limit that you are borrowing (borrow balance/ borrow limit).
- Borrow limit: If your borrow balance exceeds the borrow limit (borrow utilization > 100%), your assets are under the threat of being liquidated.
- Liquidation threshold: If your borrow balance exceeds the liquidation threshold, your assets will immediately be liquidated.
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In this table, we can see the amount of users in each group (1-1000, 1000-100k, 100k-200k, >200k), and also we can see values of the each group.
Char 1 and Chart 2 show user distribution by size of the account.
As we can see, the number of users is decreasing compared to the account size. It means that the most significant number of people-about 88%- are in the smallest account size (1-1000), and this trend decreases as the account gets more extensive.
But this is not the whole story. Pay attention to the following charts.
In Chart 3 and Chart 4, we see the USD_VALUE. As it is known, although the last category (>200) has a much lower number of users than the first category (1-1000)-0.6% vs. 88%-, the highest amount belongs to this category (>200) Therefore, these users have the most influence.
In this chart, we can see the influence of each category separately. It is clear that category >200 has the most significant impact, which, although it has fewer members, is more influential due to its higher value. This category is the whales.
But the second effective category is not 100k-200k but category 1000-100000. This can be because this category has more users than 100k-200k categories and has more influence than 1-1000. Therefore, in addition to paying attention to category >200, it is necessary to pay attention to category 1000-100000, which is of high value.
