Documentation
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  • Welcome to Mars Protocol
  • Getting Started
    • How to set up a Wallet
    • Connect your wallet
    • Using a Credit Account
  • Credit Accounts
  • Perpetual Futures (Perps)
    • Perps Vault (Counterparty Vault)
    • Funding Rate Mechanism
    • Price Impact
    • Open Interest Caps
    • Vault Solvency Protection
    • Health Factor
    • Liquidations
  • Spot & Margin Trading
  • Lending & Borrowing
  • Leveraged Yield Farming
  • High Leverage Strategies
  • Managed Vaults
    • Creating a Vault
      • How to Resume Vault Creation After Failed Transaction
    • Managing a Vault
    • Depositing into Vault
  • Risk Methodology
    • Asset Listing
    • Protocol Risk Framework
    • Perps Risk Framework
      • Maximum Leverage & LTVs
      • SkewScale
      • Open Interest Caps
      • Maximum Funding Velocity
      • Mitigating Risks of Static Parameters
    • Deposit Caps Risk Framework
  • Governance
    • MARS Token
  • Smart Contracts
    • Address Provider
    • Account NFT
    • Credit Manager
    • Health
    • Incentives
    • Oracle
    • Params
    • Red Bank
    • Rewards Collector
    • Swapper
    • Zapper
    • Perps
  • Brand kit
    • The Mars Brand
  • Legal
    • Mars FUD Bible
    • Terms of Service
    • Privacy Policy
    • Cookie Policy
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  • Interest Rate Model
  • Asset Whitelisting & Lending Restrictions
  • Lending Features
  • Borrowing Features
  • Liquidity Information
  • Summary
  • Tutorial
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Lending & Borrowing

Mars Protocol features a robust and efficient lending and borrowing system, integrated directly into its Credit Account architecture.

Last updated 22 days ago

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.

Rate Component
Description

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:

Method
Effect

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

Feature
Description

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.