Permissionless Lending Pools

This page explains how users can create lending pools in a permissionless manner.

At the core of ZeroLend One is the ability for anyone to create lending pools in a permission-less way. Allowing users to create lending pools allows the protocol to scale borrowing demand as and when needed.

(Note that one of the key setbacks of permissionless pools is that risk management cannot be scaled. To address this issue, we introduce curated vaults, allowing risk management to be curated by multiple risk managers)

When creating a lending pool, users can set:

• The assets to supply and the assets to borrow

• The LTVs & liquidation threshold (LTs) of the various assets

• The reserve factor (protocol revenue) of the entire pool

• The oracles for each asset

• Any supply/borrow caps for each asset

• Immutability of the pool. (See Optional Upgradability)

Multi-asset Lending Pools

One core advantage of ZeroLend One over other isolated lending markets is the pool's ability to have multiple assets for both borrowing and supply.

How traditional isolated markets operate vs a ZL One pool.

In typical isolated lending protocols, users create a pool where they supply an asset (Asset A) and borrow another asset (Asset B). The same pool does not reverse roles. For example, if I had to borrow Asset A, I'd have to create another pool instead.

Also, pools cannot have more than two assets at a time.

In ZeroLend One, users can create pools that can have multiple assets to supply and borrow. This allows pools to have more flexibility and more liquidity to enable features such as margin trading.

Optional Upgradability

Once created, pools have the option to become upgradeable. Upgradable pools follow a beacon proxy model, where the instance of the pool is controlled by protocol governance. Users can choose to revoke this option and make a pool immutable from any protocol upgrades.

Immutability has advantages: Users can trust the pool or the code without worrying about governance or any kind of middleman who might make changes to the pool. However, it also has disadvantages: The pool's success is only as good as the code.

One key factor in the past success of lending protocols has been the ability to push continuous updates to each of the pools.

By making upgradability optional, users can choose to make their pools fully immutable or allow governance to make changes to the pool at any time.

The only entity that can make upgrades to the pool implementation is the protocol governance.

Custom Interest Rate Strategies

Users can set interest rate strategies that are more tailored to an asset's risk. Three categories of interest rate strategies can be chosen at the time of pool creation.

Strategy	Description	Assets (eg)	Average Rates
Low Risk	For blue-chip assets only	ETH, USDC, USDT, DAI etc...	1-10%
Medium Risk	For liquid assets but not blue-chip	USDe, ezETH, weETH etc...	5-20%
High Risk	For illiquid assets or complex assets	Nascent Stablecoins, Governance tokens etc...	20-100%
Super High Risk	For incredibly risky assets	Memecoins, ve Tokens etc...	50-300+%

In addition to having interest rate strategies tailored to an asset's risk, lending pools can also choose to have user-set fixed-rate lending rates. For more info, read user-set fixed-rate lending.