Economic Risk

Risk Description

Economic risks are risks that are not directly associated with- nor influenced by Sendit as a platform provider and fully dependent on external infrastructure and factors:

Asset Risk

As Sendit is an over-collateralized and isolated money-market, every single SPL token has its own isolated SOL liquidity pool. Hence, the liquidity provider chooses which market they want to provide SOL to. This is a question of the underlying risk/reward the liquidity provider wants to take. The main risk lies in the safety of the collateral token, essentially how safe and resilient the collateral asset is against volatility, rug-pull risk, liquidity locking, etc. This risk is fully external and an inherent risk of the underlying token, particularly when supplying liquidity to memecoins.

Risk Controls

To evaluate the risk of a collateral asset, you may want to consider, but not be limited to, the following factors:

• Market cap

• Liquidity pool size

• Liquidity locking / LP distribution / LP burn

• Token holder distribution

• On-chain trading volume

• Social media activity

• Token age

• Governance controlled by EOA / MSIG / DAO + timelock

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Loan Repayment Risk

On Sendit, any user can take out a loan in accordance with predefined protocol parameters such as loan-to-value (LTV) ratios, interest rates, liquidation penalties, and other relevant terms. It is fully up to the borrower when the loan will be repaid.

For SOL liquidity providers, this means that if a borrower utilizes your provided SOL, they retain control over when the loan is repaid and closed.

A key risk for liquidity providers is utilization risk—specifically, the scenario in which your deposited assets are fully borrowed and thus unavailable for withdrawal. In such cases, you may be temporarily unable to reclaim your provided liquidity until outstanding loans are repaid.

Risk Controls

To mitigate the risk of full pool utilization, Sendit implements a dynamic interest rate model whereby the borrowing cost increases significantly as utilization approaches 100%. At full utilization, the annualized borrowing rate reaches 400% APR, creating a strong financial disincentive for borrowers to maintain open positions. This mechanism is designed to encourage timely loan repayment and ensure the ongoing availability of liquidity for depositors.