Dolomite Finance Questions Answered

Dolomite Finance is a decentralized lending and margin trading protocol built on top of smart contract infrastructure. Users deposit crypto assets to earn interest, and those same deposits can serve as collateral for borrowing other tokens — all without a centralized intermediary holding funds.

The core mechanic resembles Compound-style money markets, where supply and borrow rates adjust automatically based on how much of any given pool is being used. What sets Dolomite Finance apart is its native margin system. Deposits are held inside the Dolomite Margin Protocol, which allows positions to earn yield while simultaneously being used as collateral. Most lending platforms force you to choose one or the other. The Dolomite Finance platform lets you do both at once.

The team behind Dolomite Finance has also built layered features on top: structured strategies, token-specific incentive programs, and multi-network deployment. If you want a deeper look at the project's background, visit the about page.

Connect a compatible Web3 wallet — MetaMask, Coinbase Wallet, and WalletConnect-enabled wallets all work. Once connected, navigate to the Earn tab on the main platform. You will see a list of supported tokens with their current Supply APR displayed next to each one.

Click "Deposit" next to the token you want to supply. A transaction panel opens where you enter an amount. Approve the token allowance if this is your first deposit of that asset, then confirm the deposit transaction. Gas is paid in the native currency of whichever network you are on.

Your deposited balance appears immediately in the Dolomite Balance column. Interest starts accruing block-by-block from that point. There is no lock-up — you can withdraw at any time as long as the pool has available liquidity, which for most assets is almost always the case.

One practical note: the platform shows both APR and APY figures depending on your settings. Toggle between them in Transaction Settings at the top right. APR shows the raw per-year rate; APY compounds it. Neither includes gas costs, so factor those in for small deposits.

Rates are algorithmic and change every block based on utilization — the share of supplied assets currently borrowed. Low utilization means cheap borrowing and modest supply yields. High utilization pushes borrow rates up sharply, which attracts more depositors until the pool rebalances.

This model comes from the same interest-rate curve design pioneered by Compound and later adopted across DeFi. Dolomite Finance's protocol applies an asset-specific curve, so stablecoins, ETH, and long-tail tokens each follow different rate models tuned to their typical demand patterns.

Green APR figures on the Earn page reflect pure lending yield — the interest paid by borrowers, distributed to suppliers proportionally. Blue APR figures include external rewards, such as token incentives, that layer on top of the base rate. Hover over a blue rate to see the breakdown.

The list grows over time and varies by network. On Ethereum, the Dolomite Finance platform currently includes ETH, WETH, WBTC, cbBTC, USDC, USDT, LINK, AAVE, CRV, and several yield-bearing tokens like sUSDe, wstETH, srUSD, wsrUSD, stcUSD, mETH, USD1, and SolvBTC. Each has different supply and borrow availability depending on its collateral factor and risk profile.

Yield-bearing tokens are particularly interesting. Assets like sUSDe or wstETH already accrue value over time through their underlying protocol. Depositing them into Dolomite Finance adds a second layer — the base yield from staking or savings, plus lending yield from the Dolomite Finance protocol, plus any DOLO incentive rewards that may apply.

Assets marked with a dash in the Borrow APR column cannot be borrowed — they are collateral-only. This is typically the case for less liquid or more volatile tokens where enabling borrowing would create excessive liquidation risk.

The Dolomite Margin Protocol is the underlying smart contract layer that powers all deposits, borrows, and margin positions on Dolomite Finance. Rather than a simple pool-based system, it tracks individual account balances with precise on-chain accounting.

Every asset held inside the protocol earns interest automatically. This is the key architectural difference: in a traditional money market, you deposit tokens and receive a yield-bearing receipt token (like Compound's cTokens). In the Dolomite Margin Protocol, your balance is tracked natively — you do not receive a separate token just for holding a supplied position, though the protocol can still interoperate with external systems through wrapped representations.

The margin system sits on top of this accounting layer. It allows isolated or cross-margin borrowing positions where your supplies offset your borrows within a single account view. Think of it as a brokerage margin account, but entirely on-chain and governed by smart contracts rather than a prime broker.

To borrow, you first need collateral deposited. The protocol assigns each asset a collateral factor — for example, ETH might allow you to borrow up to 80% of its value. Your "health factor" reflects how close you are to the liquidation threshold across all your positions.

Open the Borrow tab, select the asset you want to borrow, and enter an amount within your available credit. The transaction sends borrowed tokens directly to your wallet. Interest accrues continuously on the borrowed balance, increasing your debt every block.

Keep your health factor well above 1.0. If it drops to or below 1.0, your collateral becomes eligible for liquidation. A good rule of thumb: borrow no more than 50–60% of your maximum to leave room for price moves. The Borrow Positions panel on the main page gives a real-time view of your current positions and health.

Repaying is straightforward — return to the Borrow tab, select the position, and repay partially or fully. Partial repayment improves your health factor without closing the position entirely.

The Dolomite Finance protocol's smart contracts have been reviewed through formal audit processes. The platform also integrates with Chainalysis for compliance screening — you can see the "Protected by Chainalysis" badge in the lower left corner of the main interface, which flags wallet addresses associated with sanctioned activity before transactions go through.

No DeFi protocol is risk-free. Smart contract bugs, oracle failures, and extreme market conditions all pose real risks. Dolomite Finance mitigates oracle risk by using Chainlink price feeds and applying conservative collateral factors, but users should understand that no audit eliminates all possible attack vectors.

On the operational side, the team has published smart contract addresses publicly. Users comfortable reading Solidity can verify the contract logic themselves. The GitHub repository at github.com/dolomite-exchange contains relevant code for review.

Practical safety habits: never deposit more than you can afford to lose in any DeFi protocol, monitor your borrow positions regularly, and keep a buffer between your current debt and your liquidation point.

DOLO is the native governance and incentive token of the Dolomite Finance protocol. It appears in the Earn list as a depositable asset, and it plays a central role in the incentive programs that boost yields on select markets.

The token is distributed through several mechanisms: direct supply incentives on featured assets, airdrop programs for early and active users, and via the oDOLO options-based reward system described below. Holding DOLO also opens access to governance participation and the veDOLO locking mechanism.

DOLO can be bridged across networks using the DOLO Bridge link found in the main menu. This matters because Dolomite Finance operates on multiple chains — Ethereum, Arbitrum, Berachain, Mantle, and Botanix — and DOLO needs to move between them depending on where you are active.

veDOLO stands for "vote-escrowed DOLO." It is a locked version of the DOLO token that grants holders increased governance power and a larger share of protocol incentives. The longer you lock, the more veDOLO you receive per DOLO locked.

This model, popularized by Curve Finance's veCRV system, aligns long-term token holders with protocol health. Locking tokens reduces circulating supply and rewards those committed to the Dolomite Finance platform over months or years rather than days.

veDOLO holders can direct liquidity incentives toward specific markets, which is why certain assets on the Earn page show boosted blue APRs — those boosts are often the result of veDOLO voting. If you hold a meaningful DOLO position and plan to stay long-term, locking for veDOLO is worth considering. Check the veDOLO tab in the main navigation for current lock options.

Yes. Dolomite Finance supports multiple wrapped and bridged Bitcoin representations. WBTC (Wrapped BTC) is available on Ethereum and has been on DeFi platforms for years. cbBTC (Coinbase Wrapped BTC) is a newer, Coinbase-issued version. SolvBTC is a third option from the Solv Protocol ecosystem.

Each carries a slightly different trust model. WBTC involves a centralized custodian holding native BTC. cbBTC is backed by Coinbase. SolvBTC uses a different vault mechanism. All three are ERC-20 tokens pegged 1:1 to BTC and can be deposited into Dolomite Finance to earn supply yield or used as collateral for borrowing stablecoins or ETH.

Native Bitcoin does not exist on EVM chains — you always need a wrapped version. The specific APR and borrowing availability for each BTC token varies; check the Earn page for current rates.

When a borrower's health factor drops to 1.0 or below — meaning their collateral value no longer adequately covers their debt — the protocol makes their collateral available for liquidation. A liquidator (any external party running liquidation bots) repays part of the borrower's debt and receives collateral in return at a discount.

That discount is the liquidation bonus. It incentivizes liquidators to act quickly, which keeps the protocol solvent. The exact bonus depends on the collateral asset.

From a user's perspective, the best way to avoid liquidation is simple: maintain a comfortable health factor, set up price alerts for your collateral assets, and repay or add collateral proactively if markets move against you. The Dolomite Finance interface shows your real-time health factor in the Borrow Positions section — check it regularly when markets are volatile.

As of the current deployment, Dolomite Finance operates on Ethereum, Arbitrum, Berachain, Mantle, and Botanix. The network selector button in the top-right corner of the interface shows all available options.

Each network has its own set of supported assets and liquidity pools. Arbitrum was the original home of Dolomite Finance and has the deepest liquidity. Ethereum is the newer flagship deployment with access to the widest range of ERC-20 assets. Berachain, Mantle, and Botanix are newer deployments with unique local assets.

Switching networks in your wallet automatically updates the interface to show the correct markets. Gas costs differ significantly between chains — Arbitrum and Mantle tend to be much cheaper than Ethereum mainnet, which matters for smaller deposit or withdrawal transactions.

oDOLO is an options-based reward token used by Dolomite Finance to distribute incentives. Instead of giving out raw DOLO directly, the protocol issues oDOLO — a call option that lets the holder purchase DOLO at a discounted price relative to market.

This structure benefits long-term protocol participants more than short-term farmers. Someone who immediately sells their reward tokens depresses the price. With oDOLO, recipients must actively decide to exercise the option, which requires some capital commitment. Those who exercise receive DOLO at a discount and the protocol receives payment that can fund operations or liquidity.

The Transaction Settings panel includes a toggle to show or hide oDOLO rewards in the displayed APR figures. When included, some assets show noticeably higher total yields. When excluded, you see only the base interest rate from lending activity.

Color coding on the Earn page indicates the source of yield. Green APR means the yield comes entirely from borrowers paying interest inside the Dolomite Finance protocol — it is pure lending income, generated on-chain with no external dependency.

Blue APR means the displayed rate includes external rewards layered on top. This could be DOLO incentives, yield from an underlying rebasing token (like wstETH's staking yield), or rewards from a partner protocol. Blue rates show a sparkle icon next to the number. Hover over it to see a tooltip breaking down the components.

Blue rates are often higher but carry an additional layer of dependency. If the external reward program ends, the blue APR drops back to whatever the green base rate would be. For planning purposes, treat the green portion as the baseline and the blue portion as variable upside.

Three things: a Web3 wallet, some ETH for gas, and the asset you want to deposit. That's the short version.

Longer version: install MetaMask or another compatible wallet if you do not have one. Fund it with the network's native gas token — ETH on Ethereum mainnet, ETH on Arbitrum, BERA on Berachain, MNT on Mantle. Then visit the Dolomite Finance app, connect your wallet, and navigate to the Earn tab. Browse the token list, check the current supply rates, and pick what fits your goals.

If you want to borrow, start by depositing more collateral than you plan to borrow against. Give yourself a health factor of at least 1.5 to start — that gives you meaningful buffer before any liquidation risk becomes real.

For more background on the team and protocol vision, read the about page. And if questions come up that are not answered here, the Discord community linked in the main menu is active and helpful.