Kona Lend

Overview

Kona Lend is a decentralized lending protocol built on Abstract Mainnet and a fork of Aave V3. Users can supply assets to earn interest or use them as collateral to borrow other assets.

Key Features

• Supply & Earn: Deposit assets to earn variable APY

• Borrow: Use your supplied assets as collateral to borrow other tokens

• Variable Interest Rates: Market-driven rates that adjust based on supply and demand

• Health Factor Monitoring: Real-time risk management to prevent liquidations

• Multiple Asset Support: WETH, USDC, USDT, and PENGU

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Smart Contracts

Core Protocol Contracts

All contracts are deployed on Abstract Mainnet (Chain ID: 2741).

Contract	Address	Description
Pool (Main)	0x8f16B5713F412C5dE4951Aaf678Eb8409101f819	Main lending pool contract - handles supply, borrow, repay, withdraw
Pool Addresses Provider	0x7326d30aDAec89c992eBfEbA3beDB9044AC2F704	Registry for all protocol addresses
Pool Configurator	0xCdba582C3ef468f7460e365e04180e34De3b80cf	Manages protocol configuration and parameters

Oracle & Data Contracts

Contract	Address	Description
Oracle	0xE4Cd99d4698482ff263C300fbe2fA5fE08af1622	Price oracle for asset valuation
Protocol Data Provider	0xDfc422c8793864ecD12Bc59F2024614034BcB078	Provides reserve and user data
UI Pool Data Provider	0x7F883af3cdC4e56BebfC34Fc04eAf76168399Eb9	Aggregated data for UI display

Access Control & Treasury

Contract	Address	Description
ACL Manager	0x09dC8a784f3D299C2F525a880C9d43D9eCB0E81f	Manages admin roles and permissions
Treasury	0x24f12414C02ec41dbd1B1dAb2351d46C70fcBCb8	Protocol treasury for collected fees

Helper Contracts

Contract	Address	Description
Wallet Balance Provider	0x9C32e40483F4C394005F72DB6b9BBa08686d1306	Batch fetch user token balances
UI Incentive Data Provider	0xa2dDec25Fa3ce04c5ce5f33F77CfDFDA6de8A089	Provides incentive/rewards data
Wrapped Token Gateway	0xf177F238C53B64A4faF513629A957889887c45bA	Gateway for native token wrapping
Emission Manager	0xC8Ffda370edF4a15554A4120c95641Ddd6c084C8	Manages reward emissions
Rewards Controller	0x4237d126713bf1FaBA29Ed8A55A6A0634886e223	Handles reward distribution

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Supported Assets

Asset Details

Asset	Address	Decimals	Description
WETH	0x3439153EB7AF838Ad19d56E1571FBD09333C2809	18	Wrapped Ether
USDC	0x84A71ccD554Cc1b02749b35d22F684CC8ec987e1	6	USD Coin
USDT	0x0709F39376dEEe2A2dfC94A58EdEb2Eb9DF012bD	6	Tether USD
PENGU	0x9eBe3A824Ca958e4b3Da772D2065518F009CBa62	18	Pudgy Penguins

Price Oracles -

Kona Lend uses Pyth Network as its price oracle to provide accurate, real-time asset valuations for all protocol operations. Pyth aggregates price data from over 90 institutional publishers including major exchanges, market makers, and trading firms, delivering sub-second price updates directly on-chain.

Pyth Price Feed Aggregators: -

WETH: 0x2bfa7432252D694fBCc1Ee6e2A6DFdA3Af05D989

USDC: 0x11F623E4C7BcCb716016c26633A73DE0fDcf8995

USDT: 0x2C153C79e814C1F51fF7dc75735A22872A862092

PENGU: 0xb0b8935C6538242b6Fb49eFD64c2db3825b956f5

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Key Concepts

Health Factor

The Health Factor represents the safety of your borrowed position:

• > 2.0: Safe - Low liquidation risk

• 1.5 - 2.0: Moderate - Monitor your position

• 1.0 - 1.5: At Risk - Consider repaying or adding collateral

• < 1.0: Liquidation will occur

Formula: Health Factor = (Collateral × Liquidation Threshold) / Total Debt

Loan-to-Value (LTV)

LTV determines how much you can borrow against your collateral:

• Maximum percentage of collateral value you can borrow

• Varies by asset based on risk profile

• Example: 80% LTV means you can borrow up to $800 against $1000 collateral

Liquidation Threshold

The threshold at which your position becomes eligible for liquidation:

• Always higher than LTV

• When collateral value × liquidation threshold < debt, liquidation occurs

• Example: 85% threshold means liquidation happens when debt reaches 85% of collateral value

Interest Rate Modes

Mode	Value	Description
None	0	No interest (not used for borrowing)
Stable	1	Fixed rate for predictable payments (if enabled)
Variable	2	Rate adjusts based on market utilization (default)

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How to Use Kona Lend

Supplying Assets

1. Connect your wallet to Kona

2. Navigate to the Lending page

3. Select an asset to supply

4. Enter the amount you want to supply

5. Approve the transaction

6. Confirm the supply transaction

7. Start earning interest immediately!

Benefits:

• Earn variable APY on your deposits

• Use supplied assets as collateral for borrowing

• Withdraw anytime (subject to available liquidity)

Borrowing Assets

1. Supply collateral first (if you haven't already)

2. Select an asset to borrow

3. Enter the amount (must be within your borrowing capacity)

4. Review your new Health Factor

5. Confirm the borrow transaction

Requirements:

• Must have supplied collateral

• Borrowing capacity depends on your LTV

• Must maintain Health Factor > 1.0

Repaying Debt

1. Navigate to your borrow positions

2. Click "Repay" on the asset you want to repay

3. Enter the amount to repay (or click MAX for full repayment)

4. Approve token spending (if first time)

5. Confirm the repay transaction

Benefits:

• Improve your Health Factor

• Reduce interest costs

• Free up borrowing capacity

Withdrawing Assets

1. Navigate to your supply positions

2. Click "Withdraw" on the asset

3. Enter the amount to withdraw

4. Ensure withdrawal doesn't push Health Factor below 1.0

5. Confirm the withdrawal transaction

Limits:

• Cannot withdraw if used as collateral and would cause Health Factor < 1.0

• Subject to available liquidity in the pool

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Understanding APY

Supply APY

• Interest earned on deposited assets

• Paid by borrowers

• Variable rate based on utilization

• Higher utilization = higher APY for suppliers

Borrow APY

• Interest charged on borrowed assets

• Variable rate based on utilization

• Higher utilization = higher borrow rate

• Accrues continuously

Net APY

Your overall position performance:

Net APY = (Supply Interest Earned) - (Borrow Interest Paid)

• Positive Net APY = You're earning more than you're paying

• Negative Net APY = You're paying more than you're earning

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Risk Management

Liquidation

Liquidation occurs when Health Factor drops below 1.0:

• Liquidators can repay up to 50% of your debt

• They receive your collateral at a discount (liquidation bonus)

• You lose a portion of your collateral

How to Avoid Liquidation:

1. Maintain Health Factor > 1.5

2. Monitor market volatility

3. Repay debt if Health Factor drops

4. Supply additional collateral

5. Set up price alerts

Best Practices

Safety Tips

• Keep Health Factor above 2.0 for safety buffer

• Use stablecoins as collateral to reduce volatility risk

• Don't max out your borrowing capacity

• Monitor your position regularly

• Understand asset price volatility {% endhint %}

Common Risks

• Price volatility can rapidly change your Health Factor

• High utilization may prevent withdrawals

• Gas fees apply to all transactions

• Smart contract risks (audited but not risk-free) {% endhint %}

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Transaction Flow

Supply Transaction

graph LR
    A[User] -->|1. Approve Token| B[ERC20 Token]
    A -->|2. Supply| C[Pool Contract]
    C -->|3. Mint kTokens| D[User Wallet]
    C -->|4. Transfer Tokens| E[Reserve]

Borrow Transaction

graph LR
    A[User] -->|1. Request Borrow| B[Pool Contract]
    B -->|2. Check Collateral| C[Health Factor]
    C -->|3. Validate| D{HF > 1?}
    D -->|Yes| E[Transfer Borrowed Asset]
    D -->|No| F[Revert Transaction]
    E -->|4. Mint Debt Token| G[User Wallet]

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Technical Details

Rate Calculations

Interest rates use RAY units (10²⁷) for precision:

Annual Rate = (Rate per Second × Seconds per Year)
APY = ((1 + Rate per Second) ^ Seconds per Year - 1) × 100

Utilization Rate

Utilization = Total Borrowed / Total Supply

Higher utilization leads to higher interest rates to incentivize more supply.

Collateral Calculation

Total Collateral Value = Σ(Asset Balance × Price × LTV)
Available Borrows = Total Collateral Value - Total Debt

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Integration Guide

For Developers

Connect to Pool Contract

import { createPublicClient, http } from 'viem';
import { abstract } from 'viem/chains';
import PoolABI from './abis/Pool.json';

const client = createPublicClient({
  chain: abstract,
  transport: http()
});

const POOL_ADDRESS = '0x8f16B5713F412C5dE4951Aaf678Eb8409101f819';

// Read reserve data
const reserveData = await client.readContract({
  address: POOL_ADDRESS,
  abi: PoolABI.abi,
  functionName: 'getReserveData',
  args: [assetAddress]
});

Supply Assets

import { parseUnits } from 'viem';

// 1. Approve token
await walletClient.writeContract({
  address: tokenAddress,
  abi: ERC20ABI,
  functionName: 'approve',
  args: [POOL_ADDRESS, amount]
});

// 2. Supply to pool
await walletClient.writeContract({
  address: POOL_ADDRESS,
  abi: PoolABI.abi,
  functionName: 'supply',
  args: [
    tokenAddress,           // asset
    parseUnits(amount, decimals), // amount
    userAddress,           // onBehalfOf
    0                      // referralCode
  ]
});

Borrow Assets

await walletClient.writeContract({
  address: POOL_ADDRESS,
  abi: PoolABI.abi,
  functionName: 'borrow',
  args: [
    tokenAddress,           // asset
    parseUnits(amount, decimals), // amount
    2,                     // interestRateMode (2 = variable)
    0,                     // referralCode
    userAddress            // onBehalfOf
  ]
});

Get User Account Data

const accountData = await client.readContract({
  address: POOL_ADDRESS,
  abi: PoolABI.abi,
  functionName: 'getUserAccountData',
  args: [userAddress]
});

// Returns:
// - totalCollateralBase
// - totalDebtBase
// - availableBorrowsBase
// - currentLiquidationThreshold
// - ltv
// - healthFactor

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FAQ

How do I earn interest on Kona Lend?

Simply supply assets to the protocol. Interest is earned automatically and compounds in real-time. You'll receive kTokens that increase in value as interest accrues.

What are kTokens?

kTokens are interest-bearing tokens you receive when supplying assets. They represent your deposit plus accrued interest. 1 kToken ≠ 1 underlying token over time due to interest growth.

Can I withdraw anytime?

Yes, as long as:

1. There's sufficient liquidity in the pool

2. If you have borrows, your Health Factor stays above 1.0 after withdrawal

What happens if I get liquidated?

A liquidator repays part of your debt and receives your collateral at a discount. You'll lose collateral but your debt is reduced. Always maintain Health Factor > 1.5 to stay safe.

How are interest rates determined?

Rates are algorithmic and based on supply/demand (utilization):

• Low utilization = Low rates

• High utilization = High rates

This ensures the protocol always has liquidity available.

Can I use multiple assets as collateral?

Yes! You can supply multiple different assets and they all count toward your total collateral value.

What's the difference between LTV and Liquidation Threshold?

• LTV: Maximum you can borrow (e.g., 80%)

• Liquidation Threshold: When you get liquidated (e.g., 85%)

The gap between them is your safety buffer.

Are there any fees?

The protocol charges:

• Reserve factor (small % of interest goes to treasury)

• No fees for supply, borrow, repay, or withdraw transactions (only gas fees)

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Security

Audits

Kona Lend is built on Aave V3, which has been extensively audited by multiple security firms including:

• OpenZeppelin

• Trail of Bits

• Certora

• ABDK

• Peckshield

Additional Kona-specific audits are underway.