🏦For Lenders

Welcome to the DreamLend Lender Guide! As a lender, you provide capital to borrowers and earn competitive interest rates while helping grow the decentralized finance ecosystem.

🎯 What is Lending on DreamLend?

Lending on DreamLend allows you to:

  • Earn Interest: Set your own rates and earn passive income

  • Control Risk: Define collateral requirements and loan terms

  • Earn Rewards: Receive $DREAM tokens through liquidity mining

  • Stay Liquid: Cancel offers anytime before acceptance

💰 How Lenders Make Money

1. Interest Income 📈

  • Set competitive annual interest rates (APR)

  • Earn interest from loan origination to repayment

  • Compound earnings by reinvesting

2. $DREAM Rewards 💎

  • Earn $DREAM tokens for active loan principal

  • Bonus rewards for long-term lending

  • Governance rights with accumulated tokens

3. Liquidation Participation ⚡

  • Monitor your loans for health

  • Participate in liquidations if needed

  • Earn liquidation bonuses

🚀 Getting Started as a Lender

Step 1: Prepare Your Wallet 💳

  1. Connect Wallet: Use MetaMask or compatible wallet

  2. Add Somnia L1: Configure network settings

  3. Get Tokens: Acquire lending tokens (MUSDT, MUSDC, etc.)

Step 2: Create Your First Loan Offer 📝

  1. Navigate to Create: Go to the "Create" page

  2. Select Token: Choose token to lend (e.g., MUSDT)

  3. Set Amount: Enter lending amount

  4. Configure Terms: Set interest rate and duration

  5. Define Collateral: Specify required collateral

Step 3: Monitor and Manage 📊

  1. Track Offers: Monitor pending offers in "My Loans"

  2. Manage Active Loans: Watch loan health and performance

  3. Claim Rewards: Regularly claim $DREAM rewards

📋 Creating Effective Loan Offers

Setting Competitive Rates 🎯

  • Market Research: Check existing offers for similar terms

  • Risk Assessment: Higher rates for riskier collateral

  • Duration Premium: Longer loans typically command higher rates

Example Rate Structure:

  • Stablecoin Loans: 8-15% APR

  • Volatile Asset Loans: 15-25% APR

  • Long-term Loans: +2-5% premium

Choosing Collateral Requirements 🛡️

  • Stable Collateral: USDC, USDT (lower ratios acceptable)

  • Volatile Collateral: BTC, ETH (higher ratios required)

  • Exotic Collateral: New tokens (highest ratios needed)

Recommended Collateral Ratios:

  • Conservative: 150-200%

  • Moderate: 130-150%

  • Aggressive: 120-130%

Duration Strategy ⏰

  • Short-term (7-30 days): Lower rates, higher liquidity

  • Medium-term (30-90 days): Balanced risk/reward

  • Long-term (90+ days): Higher rates, locked capital

🔍 Risk Management for Lenders

Understanding Risks 🚨

1. Default Risk

  • Borrower Default: Borrower fails to repay

  • Mitigation: Proper collateralization and liquidation

  • Recovery: Liquidation provides collateral compensation

2. Collateral Risk

  • Price Volatility: Collateral value fluctuation

  • Mitigation: Conservative collateral ratios

  • Monitoring: Regular health factor checks

3. Oracle Risk

  • Price Feed Issues: Stale or incorrect prices

  • Mitigation: Multiple oracle sources

  • Protection: Automatic staleness checks

Risk Mitigation Strategies 🛡️

Diversification

Portfolio Allocation Example:
- 40% Stablecoin loans (low risk)
- 35% Major crypto loans (medium risk)
- 20% Altcoin loans (high risk)
- 5% Experimental loans (very high risk)

Active Management

  • Daily Monitoring: Check loan health factors

  • Quick Response: Act on liquidation opportunities

  • Rate Adjustment: Update rates based on market conditions

Conservative Parameters

  • Higher Collateral Ratios: 150%+ for safety

  • Shorter Durations: Reduce exposure time

  • Quality Collateral: Stick to established tokens

📊 Monitoring Your Loans

Key Metrics to Track 📈

Loan Health Factor

  • Healthy: >150% collateral ratio

  • At Risk: 120-150% collateral ratio

  • Liquidatable: <120% collateral ratio

Performance Metrics

  • Total Lent: Amount currently deployed

  • Interest Earned: Cumulative interest income

  • Active Loans: Number of ongoing loans

  • Default Rate: Percentage of defaulted loans

Using the Dashboard 🖥️

My Loans Page

  • Active Loans: Monitor ongoing loans

  • Pending Offers: Track unaccepted offers

  • Completed Loans: Review historical performance

  • Health Alerts: Get notified of risky loans

Analytics Page

  • Portfolio Performance: Track returns over time

  • Market Trends: Understand rate movements

  • Reward Tracking: Monitor $DREAM earnings

💎 Maximizing $DREAM Rewards

Reward Mechanics 🎁

  • Base Rate: Earn rewards on active loan principal

  • Bonus Multipliers: Long-term lending bonuses

  • Liquidation Rewards: Extra rewards for liquidations

Optimization Strategies 📈

  1. Maintain Active Loans: Keep capital deployed

  2. Long-term Commitment: Longer loans earn more

  3. Participate in Liquidations: Earn bonus rewards

  4. Compound Rewards: Reinvest $DREAM earnings

Claiming Rewards 🏆

  1. Navigate to Rewards: Go to rewards page

  2. Check Balance: View accumulated $DREAM

  3. Claim Tokens: Execute claim transaction

  4. Reinvest: Use rewards for more lending

🔧 Advanced Lender Strategies

Rate Optimization 📊

Dynamic Rate Strategy:
1. Monitor market rates daily
2. Adjust rates based on demand
3. Premium pricing for quality terms
4. Competitive rates for quick deployment

Collateral Arbitrage ⚖️

  • Identify Mispriced Collateral: Find undervalued assets

  • Offer Attractive Terms: Encourage borrowing

  • Profit from Liquidations: Benefit from price corrections

Seasonal Strategies 📅

  • Bull Markets: Higher rates, more demand

  • Bear Markets: Conservative terms, quality focus

  • Volatility Events: Adjust ratios dynamically

🆘 Troubleshooting Common Issues

Offer Not Getting Accepted 🤔

Possible Causes:

  • Rates too high compared to market

  • Collateral requirements too strict

  • Unpopular token pairs

Solutions:

  • Research competitive rates

  • Adjust collateral ratios

  • Try different token combinations

Loan Health Declining 📉

Warning Signs:

  • Collateral ratio dropping

  • Price volatility increasing

  • Approaching liquidation threshold

Actions:

  • Contact borrower (if possible)

  • Prepare for liquidation

  • Monitor closely for opportunities

Liquidation Process 🎯

When to Liquidate:

  • Health factor below threshold

  • Loan past due date

  • Borrower unresponsive

How to Liquidate:

  1. Navigate to loan details

  2. Click "Liquidate Loan"

  3. Confirm transaction

  4. Receive collateral + bonus

📚 Best Practices Summary

✅ Do's

  • Diversify your lending portfolio

  • Monitor loan health regularly

  • Set competitive but profitable rates

  • Claim rewards regularly

  • Stay informed about market conditions

❌ Don'ts

  • Over-concentrate in single assets

  • Ignore health factor warnings

  • Set unrealistic rates or terms

  • Forget to claim rewards

  • Panic during market volatility

🔗 Additional Resources

Ready to start earning with DreamLend? Create your first loan offer today! 🚀

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