Sward 101
Sward is a pool-based money market. Instead of matching individual lenders with individual borrowers, everyone interacts with shared reserves, one per asset.
The core loop
- Suppliers deposit an asset (say USDC) into its reserve and start earning interest immediately. Their deposit is represented by an interest-bearing balance that grows every second.
- Borrowers deposit collateral, enable it, and borrow other assets from the reserves. They pay a variable interest rate on what they owe.
- Borrowers' interest is what suppliers earn, minus a slice (the reserve factor) that goes to the protocol treasury.
There are no repayment schedules. A loan can stay open for an hour or a year; interest simply accrues until it is repaid.
What keeps it solvent
Every loan is overcollateralised: the collateral is always worth more than the debt. Two mechanisms enforce this.
Rates respond to utilization. When most of a reserve is lent out, borrow rates climb steeply, which encourages repayment and attracts new suppliers. See interest rates.
Unhealthy positions get liquidated. If collateral falls in value or debt grows past a defined threshold, anyone can repay part of the debt in exchange for the collateral plus a bonus. See liquidations.
One market, many reserves
Sward's Core market on Robinhood Chain Testnet is cross-collateral: any enabled collateral backs any borrow. Supply ETH and DAI, borrow USDC against both. Each reserve has its own risk parameters (LTV, liquidation threshold, caps), listed under risk parameters.
Where the numbers come from
Everything in the interface is read from the chain: rates, balances, prices, caps. Prices come from the market's oracle. Nothing depends on a backend server, and nothing is custodial; funds only move when you sign a transaction.