Protocol Reserves

Reserves consist of the balance of the base or collateral asset held within the protocol, serving as a safeguard against bad debt for users. These reserves can also be withdrawn to support the development of the Swaylend protocol.

Reserves are built through two main mechanisms:

• The difference between the interest paid by borrowers and the interest earned by suppliers of the base asset contributes to the protocol's reserves

• The liquidation process can both utilize and enhance reserves, aligning with the target reserve level established by the Swaylend team.