Memecoin Yielding
Sendit's Memecoin Yielding vaults allow users to earn yield on their memecoin holdings by leveraging the protocol's lending and borrowing infrastructure. Each memecoin has its own dedicated vault that automates a yield strategy based on Sendit's internal capital efficiency mechanisms.
How It Works
Each memecoin vault enables users to deposit a specific token and earn yield in that same token. The yield is generated through a process where Sendit:
Uses the deposited memecoin as collateral to borrow SOL at a fixed loan-to-value (LTV) ratio of 50%.
Re-supplies the borrowed SOL into Sendit's lending markets, capturing a yield when the Lending APR exceeds the Borrow APR.
Manages the entire loop automatically, including borrowing, re-supplying, and continuous LTV adjustments.
This creates a yield-generating loop that is designed to operate within protocol-defined risk parameters. The goal is to capture the yield spread between lending and borrowing rates while compounding returns for users.
Yield Sources
Yield for each memecoin vault is derived from three core mechanisms:
Lending APR: Earned by lending borrowed SOL into Sendit's liquidity markets.
Loan Origination Interest: A one-time 1% interest payment at loan origination paid by the borrower that is distributed to SOL LPs over 24hr.
Token Incentives: Additional incentives distributed to protocol participants, claimed and automatically converted to SOL, then re-supplied into the vault to enable compounding.
Risk Management
Sendit aims to maintain each position within safe LTV thresholds, adjusting dynamically to market conditions. However, users should be aware of several risk factors:
Market Volatility: Both collateral (memecoin) and debt (SOL) are volatile, which can impact the liquidation price.
Liquidation Risk: If LTV thresholds are breached, positions may be liquidated, resulting in loss of funds.
System Limitations: While Sendit automates position management on a best-effort basis, extreme market conditions may result in failure to maintain safe LTV ratios.
Negative Yield Spread: If borrowing costs exceed lending yields or reward incentives decrease, the strategy may result in a net loss.
Yield Distribution
Yield is distributed in the form of the original memecoin deposited. All earned SOL from the lending loop is automatically swapped at market rate (minimum rate = oracle price -5%) into the respective token and re-deposited into the vault. This enables automated compounding of returns in the user's original asset.
Summary
Memecoin Yielding Vaults provide high-yield opportunities for holders of individual tokens by using those tokens as collateral in a structured, automated loop. While the strategy is designed to optimize returns, it carries risk and is best suited for users with a higher risk tolerance.
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