> For the complete documentation index, see [llms.txt](https://lavarage.gitbook.io/lavarage/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://lavarage.gitbook.io/lavarage/platform/protocol.md).

# Protocol

Lavarage is a decentralized non-custodial margin liquidity protocol. It is designed to work on top of existing trading liquidity on decentralized exchanges. It is like a money market platform built specifically for the purpose of making DeFi trading more capital efficient for traders.

### Three Components

1. Lending - lenders create lending pool(s) and for each pool, they can create multiple loan offers which specify the loan terms, e.g. interest rate, maximum open LTV, maximum exposure, etc for different tokens
2. Staking - stakers stake liquidity into lending pool(s) to earn yield
3. Trading - traders borrow liquidity from lending pool(s) to do margin trading on DEXs. When a margin spot long position is opened, the purchased tokens are locked in a smart contract and are used as the collateral.