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The Atlendis protocol operates as an under-collateralized lending platform, which inherently carries higher credit risk compared to its over-collateralized counterparts. However, the protocol includes various components to mitigate credit risk:
- Whitelisting of Candidates: Only institutional borrowers can be whitelisted on the Atlendis protocol, as their reputation is at stake, reducing the risk of default.
- Granular Control: Lenders on the Atlendis protocol have the ability to individually select their borrowers, choose their preferred lending rate, and manage their investment portfolio and risk profile. This allows them to avoid undesired risk from being outvoted during loan approval.
As with any DeFi protocol, the Atlendis protocol faces liquidity risk. A reduced amount of liquidity on the Atlendis protocol would affect both borrowers and lenders. A lack of liquidity on the Atlendis protocol would restrict borrowers in their borrowing capacity and limit the possibility for lenders to exit the pool while their position is actively borrowed.