What are Isolated Assets?
Learn about the difference between Main and Isolated Assets.
Last updated
Learn about the difference between Main and Isolated Assets.
Last updated
Suilend categorizes listed assets into two groups: main assets and isolated assets.
Main assets are assets that have gone through due diligence before listing and are only listed if they meet Suilend's risk framework’s criteria.
This due diligence is done on a variety of parameters to avoid listing risky and illiquid assets, minimize security risks and maintain overall protocol stability.
Isolated assets refer to assets that are separated from other assets in terms of risk and exposure.
This means that when these assets are supplied or borrowed, the potential risk of liquidation is isolated to one account rather than spread across other accounts.
On Suilend, an isolated asset must be the only asset borrowed in an account. For example, if you wish to borrow DEEP, it must be the only borrowed asset in your account.
Isolated assets tend to be newer or more volatile assets.
By isolating them, we ensure that the risks associated with these assets (like a sudden price drop) do not affect the stability of the entire protocol or other users’ collateral by creating "bad debt".
When you borrow an isolated asset, the collateral you post can only be used for that specific borrowing position. This means you can’t use the same collateral across other assets or markets. For example, USDC used for DEEP collateral cannot also be used for SUI collateral.
Likewise, if the market for the isolated asset becomes volatile, only that position (and the collateral tied to it) is at risk, protecting your other assets from liquidation.
Borrowing rates may fluctuate significantly, especially for more volatile assets. Be sure to track the rate of interest, as it can quickly increase if demand for the asset grows or if market conditions change.
The interest rate is often influenced by how much of that isolated asset is available for borrowing and how much is being borrowed. A sudden spike in demand can increase borrowing costs.
Depending on the isolated asset, Suilend may apply more conservative borrowing limits per account due to their higher risk.
Make sure to understand the maximum amount you can borrow against the collateral you’ve provided.
As isolated assets tend to be riskier, make sure to regularly monitor your borrowing position and the collateral backing it. If the price of your collateral drops, you may need to add more collateral to avoid liquidation.
