mev-toolkit/MEV_and_trading/lending

lending

tl; dr

• alice and bob deposit funds into a lending contract (e.g., aave, maker, compound). while bob leaves his original collateral locked in the protocol, he can withdraw ~50% or more (depending on the protocol and asset) at some algorithmic rate that gets paid to alice (for providing the funds).
• bob can then create a short position, reinvest for a levered long position, or withdraw money (without selling the underlying and being taxed). alice, on the other hand, generates a return on her capital.
• liquidation is paid to the address that flags loans that crossed collateralization threshold (anyone monitoring the mempool and external oracles).

in this dir

• collateralized
• uncollateralized
• composable leverage

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resources

• survey of defi lending
• leveraged lending, by defillama