What Are the Best Solana Lending Strategies

Solana is flush with choices for lenders. From Solend to Tulip Protocol and beyond, this article will explore the best Solana lending strategies to lend tokens.

There are many opportunities to earn yield from lending on Solana. In a few past articles, we laid down some basics about Solana lending protocols as well as tools for finding some of the best rewards:

If you want to lend tokens on a Solana lending platform, you can optimize your yield in multiple ways. This article will discuss ways to take advantage of some of the best lending strategies on Solana.

Manually Looping Lending Positions with Leverage

This first strategy was discussed in a Crypto Basics article on crypto leverage, and it involves manually looping positions on Solend Solana SLP tokens. This strategy can take a bit of clicking to set up, but it will multiply your ability to earn fees and rewards.

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When rewards are pumping, you can increase your share by looping.

How it works:

  • Deposit tokens for lending.
  • Borrow tokens.
  • Deposit borrowed tokens for lending.
  • Repeat.

The most common way to loop through lending is by borrowing the same token, usually a stablecoin. This is because looping the same asset (or two different stablecoins) reduces your exposure to liquidation.

However, if you can find creative opportunities that can arise between multiple assets and multiple Solana lending platforms. Looping cannot be performed on every protocol where you can lend tokens, like Tulip Finance and Francium, as the borrowing side is limited to leveraged yield farming (LYF) positions.

Earning Yield Through Solana Lending Aggregators  

Several lending aggregators on Solana can automate lending strategies on your behalf. Each protocol utilizes different strategies, but its primary goal is to pursue optimized yields from lending:

  • Tulip protocol contains a platform for strategy vaults that lend between Solend, Tulip, and Mango. Additionally, through a partnership with Friktion, you can unlock your USDC deposit and deposit tuTokens in Friktion's Volt #1.
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Pump your lending with Tulip's Strategy Vaults.
  • Everlend allows you to deposit a wide array of Solana lending assets (currently 11) that will be distributed between a selection of most of the Solana lending platforms, depending on their current APY.
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Deposit tokens for lending and Everlend automatically searches for optimized yield.
  • Mercurial Finance has launched Dynamic Vaults that chase lending yields and interact with Mercurials liquidity pools. Most of the assets you can deposit through Mercurial are stablecoins, but SOL is also accepted.

Simultaneously Lend on Solend and Participate in Other DeFi with cTokens

Solend cTokens are a versatile way to earn from lending and participate in other DeFi products and services. Wherever you deposit your cTokens, they continue accruing value from users borrowing the underlying asset on Solend.

  • You can get cTokens easily on Solend on this page.

Minting USDH with cTokens

There are currently six assets you can lend on Solend and then use that yielding position to borrow USDH. Essentially, your collateral grows in value while you can use USDH to capture additional yield around the Solana DeFi ecosystem.

Earn from lending on Solend while you borrow USDH.

Earn from Options Strategies on Katana

Katana currently has a DeFi options vault that accepts cSOL. If you find it difficult to wrap your head around the complexity of options, Katana takes care of setting positions for you.

When you deposit assets in an options vault, they are locked into the strategy until they expire. While you wait, you're earning from lending, which can squeeze extra value from your participation in Solana lending.

DeFi Composability on Solana is Rising with Potential

The extreme composability of DeFi on Solana allows for multiple ways to optimize yield on lending positions. As the ecosystem matures and more projects begin accepting cTokens (Solend), tuTokens (Tulip), and other yield-bearing assets that accrue value from lending, the possibilities for stacking yield are enormous.

Hopefully, this article can be a starting point to help users think outside the box and discover new strategies as they arise. The options for participating in Solana DeFi are growing all the time!

The Hubble Protocol community has created an unofficial guide for collecting USDH strategies, and many other DeFi communities on Solana have servers for discussing strategies on their Discord. There are many resources for discovering new opportunities on Solana these days—seek and ye shall find.

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