gmeow, we have decided that it's best if we start a blog and update you all on what we've been cooking and what we are going to cook in the imminent future. First of all, we are going to start with the basics of DeFi, lending, borrowing, and what kind of pools we will have. So let's jump right in and get started with DeFi.

Introduction to DeFi

DeFi, also known as Decentralized Finance, is a very interesting option for how financial services from Web2 are offered in Web3. It completely removes the need for a traditional centralized authority, like banks, for example. Powered by different blockchains and smart contracts, DeFi sums up the fundamental values of Web3, offering transparent and open services to anyone who is interested.

Two Key Features of DeFi

• Minimized trust: Ensures transparency and eliminates the need for a higher centralized force.

• Permissionless: Makes it easy for anyone to participate and build applications.

Lending 101

Lending allows users to deposit their cryptocurrencies into a smart contract. In return, they will receive hTokens (hyperTokens), representing both principal and accrued interest. These types of tokens can be claimed anytime, while the interest rate is determined by market demand.

Borrowing 101 (with example)

When borrowing through HyperLend, users can put various coins (even $PURR in the future) as collateral. The borrowing limit is determined by two key factors: the amount deposited by a lender (collateral factor) and the quality of the assets put down as collateral. High-quality collateral allows users to borrow more, but you have to be careful and monitor collateral levels deeply to avoid larger liquidation cascades that might occur.

Example:

1. Deposit Collateral: You have 1 ETH and want to borrow USDC (a stablecoin). You go to a crypto lending protocol like HyperLend where you are met with great yield.

2. Borrow USDC: You deposit your 1 ETH as collateral. Based on the current market conditions and the protocol's rules, you can borrow up to 75% of your ETH's value. If 1 ETH is worth $2,000, you can borrow up to $1,500 worth of USDC.

3. Receive USDC: You decide to borrow 1,000 USDC (leaving a safe margin to avoid liquidation). The 1,000 USDC is sent to your wallet, and your 1 ETH is locked as collateral in the protocol.

4. Repay the Loan: When you're ready, you repay the 1,000 USDC plus any interest accrued. Once the loan is repaid, your 1 ETH collateral is released back to your wallet.

For the big brains and more advanced users of this space, we also offer Flash Loans, which are uncollateralized loans that must be repaid within the same transaction. These types of loans are perfect for instant arbitrage opportunities, portfolio restructuring, and refinancing.

Covering All Types of Coins with HyperLend

For the most stable and liquid assets, we will use contracts based on Aave V3 code. There will be multiple pools (each with its own selected coins, e.g., one pool for majors & stablecoins, one with only stablecoins, one with $PURR & stablecoins...), completely isolated from each other, limiting the exposure of certain assets and allowing users to be exposed only to assets they are comfortable with.

On the other hand, we will be taking care of less liquid coins with isolated pools (based on contracts by FraxLend), where each pool only has one asset that can be borrowed and one that can be used as collateral.

And for the very last illiquid coins, we will be announcing in the coming weeks what kind of system we have prepared.

What's Next for HyperLend??

As we continue to push updates, we are excited to share what’s on the horizon. We are working hard to refine the UI because we want the smoothest experience possible for our users. We decided to make a strong effort into the UI after seeing what a great example Hyperliquid has become with their UI. While building, we are also actively engaging with our growing community, being involved in discussions, and, as always, we are listening to our beloved users. Currently, we are in final talks with our investors and have commenced the required auditing.

Our important clue to loyal HyperLend members: we’ll be introducing a deposit limit when we go live, so make sure to act quickly—our pools are going to fill up fast!

Lastly, we want to send a HUUUUUUGE thank you to everyone who has shown us love and support so far. Your enthusiasm and trust in HyperLend mean the world to us. We are building this together, and we couldn’t do it without you. We are truly grateful—thank you for being a part of our journey!

And if you have any more questions, feel free to DM us on Twitter—we are always available to help!