Bend is an NFT liquidity and lending protocol that enables borrowing different crypto assets from the liquidity pools. Depositors receive bTokens, in exchange of cryptocurrency deposits.

The liquidity of the protocol is the availability of the capital to face business operations: borrowing amounts and redeeming bTokens. It is a key metric, as lack of liquidity will block business operations.

At any point in time, the liquidity of the protocol can be assessed through the utilization ratio: the share of reserve that is currently borrowed for each currency.

In this section, we dive into Bend's liquidity risk by analyzing the historical availability of Bend's assets and identify periods of lack of liquidity. Then we look at the valuation of bTokens, illiquid assets often suffer from illiquidity discounts due to the difficulty to find counter parties.

The historical utilization and bToken valuation help us assess the level of liquidity risk of the protocol. Once this risk is understood, we can put in place risk management techniques through the borrow interest rate model and set up alternative sources of bToken liquidity.

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