Understanding Pool Liquidity Risk in SENDIT

This document explains the process of evaluating pool liquidity risk within the SENDIT platform. Each market on SENDIT is isolated, which means deposits in one market remain separate from others. While this structure limits systemic risk, it introduces the possibility of pool-level liquidity challenges, particularly during periods of high borrowing or low repayment.

Step 1

Examine the pool liquidity risk. On SENDIT, each market is isolated, meaning that deposits in any given market, such as Useless or Nobody, are distinct from others. This segregation helps limit systemic contagion but introduces the potential for liquidity risk within individual pools.

Step 2

Recognize that during periods of high borrowing or low repayment, a pool may become fully utilized, with all deposited SOL being borrowed. When utilization nears 100%, lenders might be unable to withdraw their SOL until loans are repaid or new liquidity is introduced. The protocol addresses this by significantly increasing borrowing costs, up to 400% APR, at full utilization to encourage repayment. However, short-term illiquidity may still occur.

Step 3

Understand that this scenario is not indicative of insolvency, but rather a timing risk. Lenders may need to wait before they can access their funds.