Lending Orderbook

Problem to Solve:

In DeFi lending markets, we use a pool system where there is 1 borrow APY and the supply APY is a function of the borrow APY.

This creates issues where future borrowers after you spike the borrow APY and increase the cost of borrowing for ALL users, or leads to capital being under utilized as users aren't willing to borrow, leading to very low capital efficiency in lending markets.

Possible Solution:

Ideally, we have an orderbook or a system where lenders and borrowers can specify the interest rate they want to borrow and supply at, and an orderbook handles the matching between users.

Alternatively, lenders can use a pool and borrowers can specify the rates they will borrow at on an orderbook, and borrows are executed overtime at different rates. For example, 100 USDC in the pool, 80 USDC can be borrowed at 4%, and 10 USDC borrowed at 3.8%, leading to higher yields for all lenders and optimized borrow costs for borrowers.

Resources:

1. First look into Solend and traditional lending markets

2. Look into Serum V4 (AOB) as a starting point

3. A list of DeFi projects that have won Solana global hackathons in the past