Lending Model

Neverland is built on the Aave V3 architecture: a battle-tested, highly secure lending protocol.

Users deposit assets to earn interest and rewards, and to use them as collateral.

Users borrow assets against their collateral, discounted by token reward incentives.

Optimized interest rates adjust dynamically based on market demand.

Neverland’s lending markets are powered by an Aave V3–based pool deployed on Monad. Users can supply assets to earn yield, borrow against collateral, and benefit from Neverland-specific features such as self-repaying loans and governance-directed incentives.

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Overview

Engine: Aave V3 lending pool on Monad (Neverland configuration). Assets: Blue-chip stables and majors (e.g., WMON, WBTC, WETH, USDC, USDT etc.), plus selected ecosystem assets. What you can do: Supply assets → earn interest (nTokens). Borrow against supplied collateral within LTV limits. Repay, adjust, or close positions at any time. Neverland integrations: DUST Incentives: earn DUST rewards for supplying and borrowing. Self-Repayment: route veDUST rewards to reduce your loan automatically. Revenue Distribution: protocol revenue is governed by veDUST.

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How Lending Works

Supplying

Deposit a supported asset into the pool. Receive nTokens that accrue interest in real time. You can withdraw anytime, provided your position remains healthy (if you are also a borrower).

Borrowing

Use supplied assets as collateral to borrow other assets. Your maximum borrow depends on each collateral’s Loan-to-Value (LTV) and your total risk. Borrow interest is variable and updates automatically with market utilization.

Repaying & Withdrawing

Repay borrowed assets partially or fully at any time. Withdraw collateral as long as your Health Factor stays above 1.0 after the withdrawal.

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Risk Parameters

Parameter	Meaning
LTV (Loan-to-Value)	Maximum amount you can borrow against collateral.
Liquidation Threshold	When a position becomes eligible for liquidation.
Liquidation Bonus	Discount liquidators receive when covering debt.
Reserve Factor	Percentage of interest routed to the Treasury.
Caps / Modes	Some assets may have supply or borrow limits, or be collateral-only.

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Health Factor (HF)

$$HF = \frac{collateralValue \times liquidationThreshold}{debtValue}$$

$$HF > 1.0 → safe | HF < 1.0 → liquidatable$$

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Interest Rate Model

Rates follow a “kinked” curve per asset:

Before the kink (Optimal Utilization): borrow APY rises gradually as utilization grows. After the kink: borrow APY rises steeply to discourage over-utilization and protect liquidity.

This design ensures stability for lenders while maintaining capital efficiency for borrowers.

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Oracles

Neverland uses Chainlink price feeds for all supported assets when available. Each feed reports USD-denominated prices (8 decimals), verified and standardized across the protocol.

Base currency: USD Quote unit: 1 × 10⁸ = $1.00

On Monad, prices are relayed through the AaveV3PriceRouter, which emits on-chain price snapshots for every lending action. This ensures consistent, indexable data for subgraphs and analytics while preserving full oracle security.

All pool operations use the latest validated oracle prices to determine borrowing capacity, Health Factor, and liquidation thresholds, ensuring consistent and manipulation-resistant valuations across the protocol.

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Incentives and the Neverland Flywheel

Neverland extends the Aave V3 model with a closed-loop incentive economy built around DUST and veDUST. Every action in the lending markets feeds back into governance and future rewards.

1. Activity-Based DUST Incentives

Supplying or borrowing assets earns DUST rewards through the DustRewardsController. Emission rates adjust dynamically by market and utilization. Users can claim rewards and choose to: Lock DUST to gain veDUST voting power, or Withdraw liquid DUST (subject to penalty). This replaces fixed external emissions with usage-driven incentives.

2. Governance Through veDUST

Locked DUST becomes veDUST, granting governance rights. veDUST holders vote on how protocol revenue is distributed across incentives, buybacks, and liquidity. Governance also decides emission priorities across markets.

3. Revenue Recycling

Borrowing interest and liquidation fees collected by the Treasury are redistributed each epoch according to veDUST votes: veDUST rewards via the RevenueReward contract LP incentives via the LPStaking contract Buybacks & burns executed by the protocol-owned safe wallet This creates a feedback loop where lending activity directly funds community rewards and deflation.

4. The Neverland Flywheel

In this model, lending generates revenue, governance redistributes it, and users who participate most gain the most—a sustainable, self-reinforcing economy.

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Liquidations

If your Health Factor drops below 1.0 (e.g., collateral price down or debt value up), the position becomes eligible for partial liquidation:

A liquidator repays part of your debt and receives collateral at a bonus. Your debt decreases, collateral is reduced, and your Health Factor is restored above 1.0. You keep control of the remaining position and can stabilize or close it.

To minimize risk:

Maintain HF > 1.2. Diversify collateral. Use the self-repaying feature to gradually reduce exposure.

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Self-Repaying Loans

Neverland connects governance rewards to lending:

Enable Self-Repay on your veNFT. Your veDUST rewards repays your loan. This improves your position’s health over time with no manual effort.

See the Self-Repayment System page for details.

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Fees & Costs

Borrow interest: variable, depends on utilization and the asset’s rate strategy. Flash loans: low, fixed premium (protocol-configured). Reserve factor: portion of interest retained as protocol revenue. Network fees: standard gas costs on Monad for interactions (supply, borrow, repay, etc.).

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Typical User Journeys

Earn yield (supplier): Supply MON → receive nMON → accrue interest. Withdraw anytime.

Access liquidity (borrower): Supply MON as collateral → borrow USDC within LTV. Enable Self-Repay on your veDUST to passively reduce debt. Repay/adjust as needed; keep HF safely above 1.0.

De-risk during volatility: Repay part of the loan, add collateral, or reduce exposure to maintain Health Factor. Self-Repay can help chip away at debt in the background.

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At a Glance

Aave V3–based markets on Monad. Oracle-secured asset pricing. Dynamic rates and transparent risk parameters. Integrated DUST → veDUST → Revenue flywheel. Optional Self-Repaying Loans powered by veDUST rewards. Governance-driven revenue distribution and deflationary mechanics.