Delegation

Delegation is a feature that allows lenders to allocate their idle funds to another lending protocol that offers a constant yield, while they wait for their liquidity to be borrowed on Rainfi.

🔄 P2P and Idle Liquidity

P2P lending on Rainfi works like an order book. Lenders create a pool, and their liquidity is made available to be borrowed based on the conditions they define.

However, whenever this liquidity isn’t borrowed, it generates 0% APY, this is called idle liquidity.

To optimize returns, idle funds can be delegated to an external protocol that provides a constant yield. As soon as a borrower requests liquidity on Rainfi, the delegated funds are automatically undelegated and lent to the borrower.

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⚙️ How It Works

1. A lender creates a pool on Rainfi to lend tokens.

2. On the pool page, the lender can access their available vaults and choose to delegate funds to generate yield until a borrow request occurs.

1. Once delegation is activated for a vault:

   • All idle funds are automatically delegated every hour.

   • This includes new deposits, repaid loans, and earned interest.

   • This ensures optimized yield generation.

2. When a borrow request is made on Rainfi, the delegated funds are instantly undelegated and redirected to the borrower.

🛠️ Flexibility

Delegation gives each user full discretion to decide on which external platform they want to allocate their idle funds.