Meteora
  • Meteora: The most dynamic and sustainable liquidity layer on Solana
  • PRODUCT OVERVIEW
    • Meteora Liquidity Pools
      • DLMM Overview
        • What is DLMM?
        • DLMM Program
        • Dynamic Fees
        • Strategies & Use Cases
        • DLMM Farming Rewards
      • DLMM Launch Pool Overview
      • Dynamic AMM Overview
        • What is a Dynamic AMM Pool?
        • Dynamic AMM LP Fee and APY Calculation
        • Creating a Dynamic AMM Pool via the UI
        • Claiming Fees from Permanently Locked Liquidity
        • Dynamic AMM Stable Pools
        • Dynamic LST Pools
        • Additional yield from Dynamic Vaults
        • Dynamic AMM Farm Overview
      • DAMM v2 Overview
      • Memecoin Pool Overview
        • Memecoin Pool v2
          • What is Memecoin Pool v2?
        • Memecoin Pool v1
          • What is Memecoin Pool v1?
          • Permanently Locking Liquidity
      • Stake2Earn Pool Overview
        • What is a Stake2Earn Pool?
        • Stake2Earn for Launchpads
      • Multi-Token Stable Pool Overview
    • Alpha Vault Overview
    • Dynamic Vault Overview
      • What is a Dynamic Vault?
      • Dynamic Vault Program
      • Hermes - Meteora's Keeper
        • Algorithm to find optimal yield allocations
        • Rebalance crank
        • Operation fee calculation
      • Design Goals
      • Security
      • Dynamic Vaults Whitepaper
      • Dynamic Vaults Community Explainers
      • Affiliate Program for Dynamic Vault
        • Become an Affiliate Partner (Dynamic Vaults)
    • Dynamic Bonding Curve (DBC) Overview
      • What is the Dynamic Bonding Curve?
      • Customizable Pool Configuration
      • Bonding Curve Formula
      • DBC Migrator Keeper
    • Meteora’s Anti-Sniper Suite
  • INTEGRATION
    • DLMM Integration
      • DLMM SDK
        • DLMM TypeScript SDK
        • CPI Examples
      • DLMM API
      • Fetching information on locked liquidity in a DLMM
    • Dynamic AMM Pool Integration
      • Dynamic AMM SDK
        • Dynamic AMM TypeScript SDK
        • CPI Examples
      • Dynamic AMM API
        • Pool Info
        • Pool State
      • Setting Pool and Fee Config for Dynamic AMM Pools
      • Create Dynamic Pool with Timestamp/Slot Activation
      • Dynamic AMM - Farm Integration
    • DAMM v2 Integration
      • DAMM v2 SDK
        • DAMM v2 TypeScript SDK
        • DAMM v2 Rust SDK
      • Setting Pool and Fee Config for DAMM v2
      • Technical FAQ
    • Memecoin Pool Integration
      • Memecoin Pool v2 Integration
        • Setting Pool and Fee Config for Memecoin Pool v2
      • Memecoin Pool v1 Integration
        • TypeScript Code Examples
        • CPI Examples
        • Setting Pool and Fee Config for Memecoin Pool v1
        • Track permanently-locked liquidity in Memecoin Pool v1
        • Track Protocol Fee from swaps in Memecoin Pool v1
    • Stake2Earn Pool Integration
    • Dynamic Vault Integration
      • Using TypeScript-Client
      • Using Rust-Client
      • Using CPI
      • Vault API
        • Vault Info
        • Vault State
      • Vault Developer Resources
    • Alpha Vault Integration
      • Alpha Vault TypeScript SDK
      • Alpha Vault without Whitelist Setup
      • Alpha Vault with Whitelist Setup
    • Dynamic Bonding Curve (DBC) Integration
      • DBC SDK
        • DBC TypeScript SDK
        • DBC Rust SDK
      • DBC Fee Scheduler Formula
      • Program Repo
      • Technical FAQ
  • TOKEN LAUNCH POOLS
    • Steps to Create a Pool for a Token Launch
      • Create: DLMM Launch Pool
      • Create: Dynamic AMM Pool
      • Create: Memecoin Pool v1
      • Create: Stake2Earn Pool
      • Create: Pools with Alpha Vault
        • Create: DLMM Launch Pool with Alpha Vault
        • Create: Dynamic AMM Pool with Alpha Vault
        • Create: Memecoin Pool with Alpha Vault
        • Create: Stake2Earn Pool with Alpha Vault
    • Anti-Sniper Fee Suite for a Token Launch
  • Resources
    • Audits
    • Meteora Program IDs
    • Meteora APIs
    • Devnet Testing
    • Community Data Dashboards & Tools
    • Meteora Brand Assets
    • THE MASSIVE METEORA STIMULUS PACKAGE
      • Overview
      • 1. Dynamic Liquidity Market Maker (DLMM)
      • 2. Formation Of An LP Army DAO
      • 3. The 10% Stimulus Proposal
  • USER FAQ
    • Getting Started LPing
      • Supported Wallets
      • Prepare SOL
      • SOL required for Rent
      • What is Wrapped SOL?
      • What is an AMM?
      • What does it mean to provide liquidity?
      • How to swap to the tokens required for adding liquidity to a pool
      • How to quickly check if a token has any risks
      • Viewing your transaction history
      • My wallet has been compromised. What should I do?
    • Differences between DLMM and Dynamic Pools
    • DLMM FAQ
    • Dynamic AMM FAQ
      • How is the pool price of the token calculated in a Dynamic AMM?
      • What is a Meteora LP token?
      • How do I see fees earned on a Dynamic AMM Pool?
      • How to track your earnings for a Dynamic Pool?
      • What is Virtual Price in a Dynamic Pool?
      • How do LP tokens, fees, and virtual price work for Dynamic Pools?
      • Why must I add liquidity in non-stable Dynamic Pools using a 50:50 value ratio?
      • What is AMP in a Dynamic Pool with stable coins?
      • Why is the USDT-USDC pool not 1:1 in ratio of assets?
      • Can I create an LST, FX, or Multi-token pool using the Dynamic Pool creation tool?
    • Alpha Vault FAQ
    • Why is the token sometimes not picked up and tradable on Jupiter?
    • How do I create a new farm?
    • Video Tutorials to Get Started
      • LP Army Boot Camp
      • DLMM Strategy Sessions / Jam Sessions
  • Security and Risks
    • Risk of Impermanent Loss (IL)
    • Risk of depositing into an imbalanced pool / pool with price out of sync
    • Smart contract risk
    • Risk of a stablecoin depeg
    • Operational risk for dynamic vaults and pools
    • Lending risk for dynamic vaults and pools
  • legal
    • Terms of Service
    • Stake2Earn Terms of Service
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  1. Security and Risks

Lending risk for dynamic vaults and pools

PreviousOperational risk for dynamic vaults and poolsNextTerms of Service

Last updated 2 months ago

If you deposit into our Dynamic Vaults or our Dynamic Pools (which compose on top of our Dynamic Vaults), your capital is being lent to different lending protocols to earn lending yield.

When loaning out capital, there is a risk of depositors being unable to withdraw their funds from the lending pools. This is caused when utilization rates of the reserves reach full capacity at 100% where borrowed amount equals the deposited amount, or when the amount of reserves remaining in the lending pools is less than the vault deposits. When this happens, depositors are unable to withdraw funds on demand.

To reduce risk, Meteora is checking pool utilization every minute and if the utilization exceeds a threshold it will withdraw funds back into the vault. Additionally, we cap the amount of capital we lend to any single protocol.

We have developed the following mechanisms to protect principals:

  • Stretch allocations in multiple lendings to diversify and manage risk across them

  • Hermes consistently monitors the utilization rates of each lending pool and is ready to withdraw funds whenever the threshold is exceeded. Current thresholds are set at 80% - allowing us to participate in popular lending pools with higher utilization rates while still leaving a buffer for Hermes to withdraw funds when required.

  • Vaults always maintain a buffer in the lending reserve to allow Hermes buffer time to react to liquidity movements.

You can read about other risks here:

https://docs.meteora.ag/liquidity-primitives/dynamic-vaults/security