DeFi Lending Research for Suppliers and Borrowers

A supplier asks whether interest, contract solvency and withdrawal liquidity justify the exposure. A borrower also needs to understand debt growth, collateral repricing and liquidation. A recursive position can combine both roles while adding dependencies; its displayed supply APY alone describes neither its net return nor its total risk.

Start with the lending hub and compare the structures in Aave versus Morpho. Keep each market’s network and contracts in your notes. Separate markets from different versions even when an interface displays the same protocol name.

Use the same timeframe and distinguish supply APY, borrowing APR, incentives and costs. For an illustrative one-year model, £10,000 earning 5% produces £500. A £5,000 debt at 8% APR costs £400; a further £30 in one-off costs leaves £70 before taxes or losses. These are hypothetical inputs, not a current offer.

Enter the same assumptions in the net-yield calculator and change one factor at a time. A small change in borrowing cost can erase a thin spread. Then read APR versus APY to understand why compounding assumptions matter over different holding periods.

Test collateral price declines, debt growth and exit liquidity separately, then consider them together. The health factor calculator illustrates entered thresholds; it does not read your position or reproduce every market rule. A model that ignores a changing oracle or collateral factor cannot settle a live liquidation question.

Study the incident log and Pendle PT collateral guide for dependency examples. A collateral token can have maturity, redemption or wrapper conditions beyond its current market price. Record how those conditions interact with the lending market’s oracle.

Use one row per exact market. Mark a missing field unknown; do not fill it with another version’s number. The purpose is to make different assumptions visible so that a later protocol change can be traced to the part of your reasoning it affects.