**Users deposit assets** to earn **interest and rewards**, and to use them as collateral.
**Users borrow assets** against their **collateral**, discounted by token reward incentives.
**Optimized interest rates** adjust dynamically based on market demand.
Neverland’s lending markets are powered by `neverland-lending-core` 1.1.0, deployed on Monad.\
Users can supply assets to earn yield, borrow against collateral, and benefit from Neverland-specific features such as **self-repaying loans** and DUST incentives.
***
### 
Overview
**Engine:** `neverland-lending-core` 1.1.0 on Monad.\ **Markets:** the main cross-collateral market (**Global Markets** in the app) and three **isolated markets** for Pendle PT-AUSD, Pendle PT-shMON and Yuzu syzUSD. See [Smart Contracts](/smart-contracts.md) for each market’s reserves and rules.\ **Assets:** Blue-chip stables and majors (e.g., WMON, WBTC, WETH, USDC, USDT etc.), plus selected ecosystem assets.\ **What you can do:**\ 
Supply assets → earn interest (nTokens).\ Borrow against supplied collateral within LTV limits.\ Repay, adjust, or close positions at any time.\ **Neverland integrations:**\ **DUST Incentives:** earn DUST rewards for supplying and borrowing.\ **Self-Repayment:** route veDUST rewards to reduce your loan automatically.\ **Revenue Distribution:** a share of protocol revenue goes to veDUST holders.
***
### How Lending Works
#### Supplying
Deposit a supported asset into the pool.\ Receive **nTokens** that accrue interest in real time.\ You can withdraw anytime, provided your position remains healthy (if you are also a borrower).
#### Borrowing
Use supplied assets as **collateral** to borrow other assets.\ Your **maximum borrow** depends on each collateral’s **Loan-to-Value (LTV)** and your total risk.\ Borrow interest is **variable** and updates automatically with market utilization.
#### Repaying & Withdrawing
Repay borrowed assets partially or fully at any time.\ Withdraw collateral as long as your **Health Factor** stays at 1.0 or above after the withdrawal. The app keeps a small safety margin: a maximum withdrawal stops at a Health Factor of 1.01.
***
### Risk Parameters
| Parameter | Meaning |
|---|---|
| LTV (Loan-to-Value) | Maximum amount you can borrow against collateral. |
| Liquidation Threshold | When a position becomes eligible for liquidation. |
| Liquidation Bonus | Discount liquidators receive when covering debt. |
| Liquidation Protocol Fee | Share of the liquidation bonus routed to the Treasury (10% on most reserves). |
| Reserve Factor | Percentage of interest routed to the Treasury. |
| Caps / Modes | Some assets may have supply or borrow limits, or be collateral-only. |
**Health Factor (HF)**
$$
HF = \frac{collateralValue \times liquidationThreshold}{debtValue}
$$
$$
\text{HF} > 1.0 \Rightarrow \text{safe} \qquad \text{HF} < 1.0 \Rightarrow \text{liquidatable}
$$
***
### Interest Rate Model
Rates follow a “kinked” curve per asset:
**Before the kink (Optimal Utilization):** borrow APY rises gradually as utilization grows.\ **After the kink:** borrow APY rises steeply to discourage over-utilization and protect liquidity.
This design ensures stability for lenders while maintaining capital efficiency for borrowers.
***
### Oracles
Neverland uses 
[**Chainlink**](https://chain.link/) **price feeds** for all supported assets when available.\
Each feed reports **USD-denominated prices (8 decimals)**, verified and standardized across the protocol.
**Base currency:** USD\ **Quote unit:** 1 × 10⁸ = $1.00
Liquid staking tokens, earnAUSD and syzUSD are priced by Neverland **RatioOracleAggregator** contracts, which combine a Chainlink exchange-rate feed with a Chainlink USD feed. Pendle Principal Tokens are priced by Neverland **PendlePtDiscountOracleAdapter** contracts, which discount the settlement asset’s price to maturity.
Lending actions also record the oracle price in on-chain events, giving subgraphs and analytics consistent, indexable price data.
All pool operations use the latest validated oracle prices to determine borrowing capacity, Health Factor, and liquidation thresholds, ensuring consistent and manipulation-resistant valuations across the protocol.
***
### Incentives and the Neverland Flywheel
Neverland extends its lending core with a closed-loop incentive economy built around **DUST** and **veDUST**. Every action in the lending markets feeds back into governance and future rewards.
#### 1. Activity-Based DUST Incentives
Supplying or borrowing assets earns DUST rewards through the **DustRewardsController**.\ Each market carries its own emission rate.\ Users can claim rewards and choose to:\ **Lock DUST** to gain veDUST voting power, or\ **Withdraw liquid DUST** (subject to penalty).\ This replaces fixed external emissions with usage-driven incentives.
#### 2. Governance Through veDUST
Locked DUST becomes **veDUST**, granting governance rights.\ veDUST holders vote on governance proposals, such as asset listings, new markets, and changes to DUST mechanics.\ Community voting on how protocol revenue is split across incentives, buybacks, and liquidity is not enabled yet; for now, the team sets the split.
#### 3. Revenue Recycling
The **Treasury** collects the reserve-factor share of borrowing interest, the liquidation protocol fee, and flash-loan premiums, and that revenue is redistributed across:\ **veDUST rewards** via the RevenueReward contract, paid weekly in USDC\ **LP incentives** via Merkl incentive campaigns\ **Buybacks & burns** executed by the protocol-owned safe wallet\ This creates a feedback loop where lending activity directly funds community rewards and deflation.
#### 4. The Neverland Flywheel
Liquidations
If your Health Factor drops below 1.0 (e.g., collateral price down or debt value up), the position becomes eligible for partial liquidation:
A liquidator repays part of your debt and receives collateral at a **bonus**. A share of that bonus goes to the Treasury as the liquidation protocol fee.\ Your debt decreases, collateral is reduced, and your Health Factor improves. One liquidation may not bring it back above 1.0, in which case the position can be liquidated again.\ You keep control of the remaining position and can stabilize or close it.\ A borrower cannot liquidate their own position; the liquidator must be a different address.
To minimize risk:
Maintain HF > 1.2.\ Diversify collateral.\ Use the self-repaying feature to gradually reduce exposure.
***
### Self-Repaying Loans
Neverland connects governance rewards to lending:
Enable **Self-Repay** on your veNFT.\ Your veDUST rewards **repays** your loan.\ This improves your position’s health over time with no manual effort.
See the [**Self-Repayment System**](/loan-self-repayment-system.md) page for details.
***
### Fees & Costs
**Borrow interest:** variable, depends on utilization and the asset’s rate strategy.\ **Flash loans:** 0.50% premium, paid entirely to the Treasury. Available on most main-market reserves and disabled in the isolated markets.\ **Reserve factor:** portion of interest retained as protocol revenue.\ **Liquidation protocol fee:** share of each liquidation bonus retained as protocol revenue.\ **Network fees:** standard gas costs on Monad for interactions (supply, borrow, repay, etc.).
***
### Typical User Journeys
**Earn yield (supplier):**\ Supply **MON** → receive **nWMON** → accrue interest.\ Withdraw anytime.
**Access liquidity (borrower):**\ Supply **MON** as collateral → borrow **USDC** within **LTV**.\ Enable **Self-Repay** on your **veDUST** to passively reduce debt.\ Repay/adjust as needed; keep **HF safely above 1.0**.
**De-risk during volatility:**\ Repay part of the loan, add collateral, or reduce exposure to maintain Health Factor.\ Self-Repay can help chip away at debt in the background.
***
### At a Glance
A main market and three isolated markets on Monad, all running `neverland-lending-core`.\ Oracle-secured asset pricing.\ Dynamic rates and transparent risk parameters.\ Integrated **DUST → veDUST → Revenue** flywheel.\ Optional **Self-Repaying Loans** powered by veDUST rewards.\ Revenue shared with veDUST holders, LP providers plus deflationary buybacks and burns.
---
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