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Protocol Reserves

Reserves consist of the balance of the base or collateral asset held within the protocol, serving as a safeguard against bad debt for users. These reserves can also be withdrawn to support the development of the Swaylend protocol.

Reserves are built through two main mechanisms:

  • The difference between the interest paid by borrowers and the interest earned by suppliers of the base asset contributes to the protocol's reserves

  • The liquidation process can both utilize and enhance reserves, aligning with the target reserve level established by the Swaylend team.

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Last updated 4 months ago

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