Sonne Finance is a decentralized lending protocol that launched on Optimism in 2022. Sonne Finance lets users borrow money easily and quickly. It aims to be the best lending platform on Optimism.
Sonne Finance’s collateral and reserve mechanic is based on Compound Finance's system. Reserves are an accounting entry in each soToken contract that represents a portion of historical interest, determined by the reserve factor. The reserve factor is the percentage of interest paid to Sonne Finance, and it is different depending on the asset. Sometimes, Sonne Finance may change the collateral and reserve factors based on things like liquidity.
When a borrower has to face liquidation, a liquidator uses the "absorb" function to calculate the value of the collateral minus a penalty, and returns it to the borrower in the base asset. After the liquidation event, usually the borrower ends up with no debt and some base assets. The protocol uses its reserves of the base asset to pay for each absorption, and receives the collateral assets in return. If the protocol's remaining reserves fall below the target level, liquidators can buy the collateral at a discount using the base asset, which increases the protocol's reserves of the base asset.
Participants of Sonne Finance, whether they are borrowers or lenders, are rewarded with SONNE tokens.
SONNE's total supply: 100,000,000
SONNE's circulating supply: 34,478,042
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