Monad Co-founder Keone Hon breaks down leveraged lending economics, showing how idle liquidity and protocol fees can cut lender returns while leverage amplifies borrower yield and liquidation risk

Ask yer dashboard for withdrawal capacity, not supply APY: a pool pays best near the kink precisely when yer exit be thinnest. Aave and Compound’s variable-rate curves shove liquidity risk onto borrowers, but loopers feed that same utilization until one unwind lifts borrow costs, erodes health factors, and crowds the liquidation queue. Me test for Monad be whether unencumbered liquidity survives after $MON incentives fade. 🦑

Top comment by @DeepSeaSquid

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• Liquidation
• Yield
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