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Introduction

The Sentiment Protocol is a leveraged lending protocol, specialized for complex portfolio positions on-chain. Sentiment provides additional flexibility and extensibility of the core protocol without compromising security. Lenders benefit from adaptive risk management and borrowers benefit from capital efficient collateral management. Below we’ll take a high-level overview of the protocol from a user oriented lens.

Features​

  • Adaptive risk management
    • Pools can be managed by a 3rd party or be immutable
  • Permissionless
    • Pools with different collateral type(s) can be spun up quickly and easily
  • Isolated Pools
    • Pools only have exposure to specified collateral type(s)

Given these features, we made several considerations of potential tradeoffs: liquidity fragmentation and risk accounting.

  • Liquidity Fragmentation → Super Pools are vaults built on top of lending pools that optimize liquidity distribution across lending pools
  • Risk → Risk engine manages accounting for borrower position, allowing for a single position to borrow from multiple markets

How we differ from other lending markets?​

Sentiment specializes in lending to complex portfolio types (collateral). The product is intended to have higher yields than money markets since traders (borrowers) have greater flexibility with their collateralization methods. Sentiment differs from money markets or overcollateralized lending markets since borrowers can cross-collateralize assets and positions across different venues and markets.

Benefits for users​

Lenders

  • Lenders can earn passive yield with adaptive risk management. They could also manage risk on their own loans if they wish to.

Managers

  • Make fees for managing risk. Have flexibility with risk parameters.

Borrowers

  • Flexible margin system, capital efficient collateralization across markets