What is Lulo?
Lulo is a lending aggregator on Solana built to generate the best yield for users who want to put their stablecoins to “work”. By checking through the best lending protocols on Solana for the highest rates available, Lulo provides a secure way to grow one’s wealth by generating earnings through lending. Lulo routes through these lending protocols automatically to give users the best possible yields they can earn on their stablecoin at the time.
How Does Lulo Work?
Lulo monitors lending rates across the supported protocols and rebalances funds according to what will benefit the depositor the most. Lulo rotates deposited capital by routing funds to the protocol that offers the best yield per time. If Save is leading, the funds are sent there; if the leaderboard of the rates changes to Drift, then Lulo deploys the stablecoins to Drift. One of the nice features of Lulo is that as a user, you do not need to intervene in these processes as Lulo handles them automatically. This feature from Lulo removes the friction between switching applications while also eliminating the risk of funds misappropriation and getting hacked.
The yield earned from Lulo comes from the traders and borrowers in the integrated lending protocols such as Kamino, Drift and Save. Borrowers must provide more collateral to use deposited funds so that if there is a default, the asset supplied is enough to cover the loan taken.
The lending aggregator utilizes a peer-to-peer lending model powered by a fully on-chain matching engine. This model helps offer lenders better yields while granting borrowers competitive rates. Lulo also allows depositors to select specific dApps and adjust their risk parameters according to their preferences.
Using Lulo
- Lulo Protect: This is a smart contract risk protection for deposited funds. It is automatic and does not require the user’s intervention when there is a need to cover the losses if a dApp fails to work as intended. It is also worth noting that the depositor’s capital is spread across multiple protocols to reduce risk. Protect covers smart contract exploits, oracle failures, and bad debts. Lulo Protect does not protect against general ecosystem issues such as Solana network outages or failures within Lulo smart contracts themselves.
- Lulo Boosted: This special type of Protect offers a higher yield option for users. Boosted depositors earn the protection fee contributed from the Protected category. Lulo boosted is ideal for users willing to take higher risks for higher earnings. Depositors earn from the lending market while also gaining from the risks they undertake for the market. For Boosted users, there is a mandatory 48-hour period for withdrawals, and their deposits are used to cover losses for the Protected Deposits It is possible that Boosted Depositors may lose some or all of their funds depending on the severity of the failure of the dApp.
- Classic (Custom): In the Classic option, users can customize the dApp list they want to include for their deposited capital. This means that Lulo’s routing of these specific assets will only work for the selected lending protocols and what they offer. Classic gives a user the ability to control where their funds go through.
As shown in the image below, users can select the lending platforms they want to use for their stablecoin deposits. The Max Exposure feature allows users to choose their limits for the total amount of their liquidity that can be assigned to a single source of yield (i.e., a single dApp).
Confirm the selection and approve the transaction.
Lulo for Developers
Lulo is open source, and developers can integrate Lulo directly into their applications while also getting the protection that comes with the Lulo dApp. With Lulo, developers can offer higher earning opportunities to their users without worrying about risk management or building from scratch. To get started with Lulo integration, follow the guide here.
Conclusion
Lulo works excellently for people new to cryptocurrency applications and experienced users as it removes the complexities and the risks involved with manually scouting for the best yields across different applications for one’s stablecoins. Lulo helps to grow wealth through the best possible earnings available for one’s capital on the Solana blockchain.