Lending in the real world is a complicated subject. If you are attempting to start up a business, then you need capital backing or to take out a loan yourself. When you take out a loan, you must provide some collateral to guarantee you will pay it back. While something is up for collateral, it cannot be used for anything else.
The value of the asset you want to borrow is called the Loan To Value (LTV). For instance, if you borrow $60 worth of some cryptocurrency and you provide $100 as collateral, your LTV is $60/$100 = 0.6.
Liquidation is a way to protect lenders from a negative price fluctuation. If the value of your collateral is insufficient, the liquidators may purchase your collateral at a discount. Lending protocols usually set target LTVs for their lending pools, and as a borrower, your main risks involve losing your collateral through mismanagement of your position’s LTV.
Port Finance is a non-custodial money market protocol on Solana. The purpose of this app was to create a large listing of interest rate and lending protects for Solana. Port Finance has a number of lending pools, which are called Reserves in their context.
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