Lending & Borrowing
Mars Protocol features a robust and efficient lending and borrowing system, integrated directly into its Credit Account architecture.
Users can earn yield by supplying assets to the protocol or borrow assets to pursue leveraged strategies. The system is governed by a dynamic interest rate model and risk-managed asset whitelisting.
Interest Rate Model
Mars Protocol employs a two-slope utilization-based interest rate model, inspired by proven designs from protocols such as Aave. This model balances supply and demand to ensure optimal capital efficiency and risk mitigation.
How It Works
The model defines two distinct utilization zones:
Slope 1: Low to Optimal Utilization
Interest rates increase gradually as utilization rises.
Encourages borrowing and keeps costs low when liquidity is abundant.
Slope 2: Optimal Utilization to 100%
Interest rates increase steeply to discourage further borrowing as liquidity becomes constrained.
Borrowing APR
Increases with utilization. Borrowers pay interest to the pool.
Lending APR
Derived from Borrowing APR, distributed across lenders. Always lower due to protocol reserves.
The protocol aims to keep each asset’s utilization around the optimal level, maximizing capital efficiency without compromising system solvency.
Asset Whitelisting & Lending Restrictions
To maintain system security and reliability, Mars enforces asset-level permissions:
Only whitelisted assets can be deposited or borrowed.
Not all whitelisted assets are borrowable.
Example: Liquid Staking Tokens (LSTs) are generally non-borrowable due to their price manipulation risk via redemption mechanisms.
If an asset cannot be borrowed:
It will have no Borrow APR.
It may still be deposited and lent out (e.g., as passive liquidity).
Lending Features
Mars offers users several mechanisms to earn passive income through lending:
Deposit Caps
Every whitelisted asset is subject to a deposit cap, limiting the maximum allowable supply.
Caps apply regardless of borrowability.
Users can view:
Current deposits
Remaining capacity
Details in the Risk Parameters section
Auto-Lend Toggle
Located in the Credit Account interface
When enabled, all deposited assets are automatically lent
Provides a hands-free yield generation mechanism
Ideal for users seeking to maximize utilization without manual management
Borrowing Features
The borrowing system is built to support flexibility, transparency, and control.
Borrowing Options
Users can borrow in two ways:
To Wallet
Increases external capital, enabling margin or off-protocol use
To Credit Account
Boosts leverage directly within Mars
Repayment Options
Manual repayment available via the user interface
Repayments can be partial or full
Real-time account health and debt visibility support informed decision-making
Liquidity Information
All asset-specific lending and borrowing parameters are visible in real-time:
Available Liquidity: Total amount that can currently be borrowed
Utilization Rate: Ratio of borrowed to total supplied capital
Maximum Borrow Capacity: Based on the user’s Credit Account collateral
These indicators help users assess borrowing feasibility and forecast interest rate trends.
Summary
Interest Model
Two-slope utilization curve with optimal efficiency targets
Lendable Assets
Whitelisted only; some may not be borrowable
Deposit Caps
Enforced per asset; visible in UI
Auto-Lend
Automatically lends all Credit Account assets
Borrow Options
To wallet (external use) or Credit Account (internal leverage)
Risk Controls
Live liquidity and utilization metrics
Tutorial
Lending and Borrowing on Mars Protocol combine flexible capital deployment with strong risk management, offering users a sophisticated yet intuitive DeFi money market experience. Whether you're a passive lender or an active borrower, Mars equips you with the tools to manage yield and leverage efficiently.
Last updated