FAQ

General

What is Neverland?

Neverland is a decentralized non-custodial liquidity protocol where users can participate as suppliers, borrowers, LP stakers, or governance participants through DUST locking. Suppliers provide liquidity to the market while earning interest, and borrowers can access liquidity by providing collateral that exceeds the borrowed amount. LP stakers can earn protocol-directed incentives for supporting liquidity pools involving the protocol token, with allocations determined through governance by veDUST holders.

How do I interact with Neverland?

Neverland is completely permissionless, meaning anyone can access it. Users can interact with Neverland through a user-friendly interface or directly with its smart contracts on supported blockchain networks. This openness also enables the creation of third-party services or applications that integrate with the protocol.

To interact with the Neverland Protocol, simply connect your crypto wallet and supply your preferred asset and amount. Once supplied, you'll earn passive income based on market borrowing demand. Additionally, your supplied assets can be used as collateral, enabling you to borrow other assets.

Do I need a wallet to interact with Neverland?

Yes, you need a wallet to interact with Neverland. To interact with Neverland, you need a wallet on the corresponding network such as a hardware wallet, browser extension, mobile wallet, multi-signature wallets, among others.

When interacting with the Neverland Protocol interface, wallets are connected using methods such as mobile wallets (Family), browser wallets (MetaMask, Rabby, etc.), WalletConnect, and more. These connection methods are utilized to prompt for messages and transactions to be signed in the connected wallet.

What is the cost of interacting with Neverland?

Interacting with the Neverland Protocol requires transactions on the blockchain network it is deployed on. These transactions may incur gas fees, which are non-refundable network transaction fees determined by the network status and transaction complexity. The connected wallet will ask you to confirm the gas fee when signing a transaction.

Can funds be frozen?

No central entity has the authority or ability to freeze or alter individual user positions within the Neverland protocol. Users maintain complete self-custody of their funds, and there is no mechanism for freezing or modifying individual positions by any entity.

Risk Management Controls: While individual positions are untouchable, the protocol includes specific risk management functions designed to safeguard the overall system. These functions are strictly limited to broader protocol actions and do not extend to individual user positions:

Emergency Admin Role: the EmergencyAdmin role can pause specific reserves for purposes of risk management. However, even this action is limited to the reserve level and does not allow for freezing or altering individual positions. These roles are designed to protect the integrity of the protocol as a whole and do not have the capability to interfere with or directly manage individual user funds.

Why do I need to approve tokens?

Approving tokens is a necessary step when performing actions that involve transferring tokens to a smart contract, such as supplying and repaying tokens to the Neverland Protocol. If a token approval is required, the frontend interface will prompt users to perform the approval with one of the following methods:

Transaction: a transaction is an onchain action that requires gas fees and time to confirm. You will be prompted to approve/pay for the gas fee to facilitate the transaction.

Signature: when a signature approval is required to transfer tokens, you will be prompted to sign a message with the same wallet making the transaction.

Risk

What are the risks involved in using Neverland?

No platform can be considered entirely risk free, but extensive steps have been taken to minimize the risks as much as possible - the protocol code has been forked from AAVE V3’s battle tested open source code and it has been audited. Any changes in code and/or new features are tested and audited before release. Different risk categories are explained in detail below.

Smart Contract Risk: Smart contract risk involves the potential for bugs or vulnerabilities within the Neverland Protocol code or the underlying reserve tokens.

Oracle Risk: Oracle risk arises from the reliance on third-party data providers for price feeds and other external data such as redemption ratio for liquid staking tokens. If an oracle fails or is compromised, it could lead to incorrect valuations of assets.

Collateral Risk: Collateral risk pertains to the value and stability of assets used as collateral. The inability to liquidate collateral due to rapid decrease in value or insufficient external liquidity can result in bad debt.

Network Risk: Network risk involves the potential issues related to the underlying blockchain networks upon which the Neverland Protocol operates. These risks include congestion, censorship, or security vulnerabilities.

Supplying & Earning

How do I supply?

Browse to the "Supply" section and click on "Supply" for the asset you want to supply. Select the amount you'd like to supply and submit your transaction. Once the transaction is confirmed, your supply is successfully registered and you begin earning interest.

Transferring tokens on an Ethereum based network requires a token approval from your self-custodial wallet. This must be performed with a transaction or signed message prior to the supply.

How much can I earn?

Suppliers receive continuous earnings that evolve with market conditions. Suppliers share the interests paid by borrowers corresponding to the average borrow rate times the utilization rate. The higher the utilization of a reserve, the higher the yield for suppliers.

You can find the current supply rate for each token in the Markets tab of the Neverland Protocol Interface.

Are there limitations to supply?

There is no minimum amount to supply. However, markets may have a supply cap parameter which limits the total amount that can be supplied of a particular asset.

Where are supplied tokens stored?

Supplied tokens are stored in publicly accessible smart contracts that enable overcollateralised borrowing. The Neverland Protocol is built using Aave V3's smart contracts, which have been audited and formally verified by third parties.

How do I withdraw?

Withdrawing from the Neverland Protocol occurs on the Pool smart contract. Withdrawal transactions can be performed through the Neverland Interface by navigating to the "Dashboard" section and clicking “Withdraw.” Select the amount to withdraw and submit the transaction.

You need to make sure there is enough liquidity (not borrowed) in order to withdraw; if this is not the case, you need to wait for more liquidity from suppliers or borrowers repaying.

Can I opt-out of my asset being used as a collateral?

Yes. After supplying your assets, you are able to unselect the asset so that it will not be used as collateral. The opt-out is available in the "Supply" section within your dashboard. Simply switch the "use as collateral" button on the asset you would prefer to opt-out from being used as a collateral.

You can withdraw your assets without opting out of using them as collateral, as long as those funds are not actively being used to borrow and provided the withdrawal amount would not cause a liquidation on your borrow positions.

Borrowing

How do I borrow?

Before borrowing you need to supply approved asset to be used as collateral (check out the Supplying & Earning FAQ section for more info). After this, you can execute a borrow from the Neverland smart contracts or a user interface. On the Neverland Interface, head to the Borrow section and click on “Borrow” for the asset you want to borrow. Adjust the amount you need based on the available collateral balance, and confirm the transaction in your wallet.

How much can I borrow?

The maximum amount you can borrow depends on the value you have supplied, the available liquidity, and the asset borrow cap. For example, you can’t borrow an asset if there is not enough liquidity or if your health factor doesn’t allow you to.

Why would I borrow instead of selling my assets?

Selling your assets means closing your position on that particular asset. Hence, if you are long on the asset, you would not be entitled to the potential upside value gain. By borrowing you are able to obtain liquidity (working capital) without selling your assets. Users are mainly borrowing for unexpected expenses, leveraging their holdings or for new investment opportunities.

How do I repay my borrow position?

Borrow positions can be repaid through Neverland smart contracts or a user interface. On the Neverland Interface, go to the Borrowings section of your dashboard and click on the "Repay" button for the asset you borrowed and want to repay. Select the amount to repay and confirm the transaction.

How much would I pay in interest?

The interest rate you pay for borrowing assets depends on the supply and demand ratio of the asset and interest rate curve parameters. You can find the current borrow rate for each borrowable token in the Markets tab of the Neverland Interface.

When do I need to pay back the borrow position?

There is no fixed time period to pay back the borrow position. As long as your position is properly collateralised, you can borrow for an undefined period. However, as time passes, the accrued interest will grow making your health factor decrease, which might result in your supplied assets becoming more likely to be liquidated.

Liquidations

What is Health Factor?

Health factor is the numeric representation of the safety of a borrow position, calculated as:

Total Collateral Value * Weighted Average Liquidation Threshold / Total Borrow Value

Liquidation Threshold is a parameter for each collateral asset which is the maximum percentage of value that can be borrowed against a collateral asset. A health factor below 1 represents a borrow position that is eligible for liquidation.

For example, if you supply $10,000 in ETH with an 80% threshold and borrow $6,000 in USDC, your health factor = 10000 * 0.8 / 6000 = 1.333.

What happens when my health factor is reduced?

Depending on the value fluctuation of your supplies, the health factor will increase or decrease. If your health factor increases, it will improve your borrow position by making the liquidation threshold more unlikely to be reached. In the case that the value of your collateralised assets against the borrowed assets decreases, your health factor is also reduced, resulting in increased liquidation risk.

What are liquidations?

A liquidation is a process that occurs when a borrower's health factor goes below 1 because their collateral value does not properly cover their borrow value. This can happen when the collateral value decreases and /or when the borrow position value increases beyond the liquidation threshold of the collateral assets.

In a liquidation, up to 50% of a borrower's debt is repaid and that value + the liquidation fee is taken from the collateral available, so after a liquidation that amount liquidated from your borrow position is repaid.

Liquidations are a permissionless feature of the Neverland Protocol. If a borrow position has insufficient collateral to cover the liquidation threshold, then any address on the network is able to initiate a liquidation transaction.

How much is the liquidation penalty?

The liquidation penalty (or bonus for liquidators) depends on the asset used as collateral.

Can you give an example?

Example 1

Peter supplies 10 ETH and borrows 5 ETH worth of crvUSD. If Peter’s Health Factor drops below 1 his borrow position will be eligible for liquidation. A liquidator can repay up to 50% of a single borrowed amount = 2.5 ETH worth of crvUSD. In return, the liquidator can claim a single collateral which is ETH (5% bonus).

The liquidator claims 2.5 + 0.125 ETH for repaying 2.5 ETH worth of crvUSD.

Example 2

Wendy supplies 5 ETH and 4 ETH worth of BTC, and borrows 5 ETH worth of USDT. If Wendy’s Health Factor drops below 1, her borrow position will be eligible for liquidation. A liquidator can repay up to 50% of a single borrowed amount = 2.5 ETH worth of USDT. In return, the liquidator can claim a single collateral, as the liquidation bonus is higher for BTC (15%) than ETH (5%) the liquidator chooses to claim BTC.

The liquidator claims 2.5 + 0.375 ETH worth of BTC for repaying 2.5 ETH worth of USDT.

What is a good health factor?

Health Factor represents the ratio of collateral to borrow value. There is not an exact answer as to what constitutes a "safe" health factor as it depends on the volatility and correlation of collateral and borrow asset prices.

Each collateral and borrow asset has a corresponding oracle that reports the price of the token with respect to a base currency (typically USD). In general, if the collateral and borrow assets are highly correlated with respect to the base currency (such as supplying and borrowing only stablecoins or ETH-correlated assets), a lower health factor can be considered safe compared to a position where assets are not correlated.

What is my liquidation price?

The liquidation price of an account is a point at which the balances and oracle prices of the collateral and borrow positions results in a health factor < 1.0. Health factor depends on the balances and oracle prices of all collateral and borrow tokens, so liquidation price is not a single point, it is a curve of combinations.

How can I avoid getting liquidated?

To avoid liquidation you can raise your health factor by supplying more collateral assets or repaying part of your borrow position. By default, repayments increase your health factor more than supplies. Also, it's important to monitor your health factor and keep it high to avoid a liquidation. Keeping your health factor over 2, for example, gives you more of a margin to avoid a liquidation.

You should be mindful of stablecoin price fluctuations due to market conditions and how it might affect your Health Factor. For example, the market price of USDC 1.00 might not equal exactly USD 1.00, but USD 0.95, for example. The price fluctuations of stablecoins, like any assets, affects your Health Factor.

Governance

How can I participate in governance?

Participating in Neverland governance requires that an account have a balance of vote-escrowed Pixie DUST (veDUST).

What is veDUST?

veDUST is a non-standard ERC20 implementation. veDUST cannot be transferred. The only way to obtain veDUST is by locking DUST. The maximum lock time is four years. One DUST locked for four years provides an initial balance of one veDUST.

A user’s veDUST balance decays linearly as the remaining time until the DUST unlock decreases. For example, a balance of 4,000 DUST locked for one year provides the same amount of veDUST as 2,000 DUST locked for two years, or 1,000 DUST locked for four years.