D
Deleted member 1333509
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Big Disclaimer: Research how these platforms work before interacting with them - like anything else in crypto don't just jump in and learn afterwards. You can lose money, nothing is guaranteed, and the less you understand the more chance you'll lose money. The more you know the more chance you'll bank and sleep well at night while you do it.
There are platforms in the defi space like Aave and Cream.Finance that are decentralized lending markets that allow you to get crypto-collateralized loans freely.
I've not had anything significant to do with lending until quite recently, but it's certainly an aspect of defi that many people can gain a lot of benefit from.
A few really good use cases:
- if you're holding bags for the long term and need some cash IRL for something else, you can stake and lend that crypto that you're going to hodl anyway, and get a loan of USDT, USDC, DAI etc which you can then liquidate and use. Then when you can pay back the loan, you'll get back your collateral. This is really useful if you would normally be in the position of having to sell some of your crypto to pay for something but then also realising that the price of that asset is likely to go up over the coming weeks and months. That way you can still maximise the size of the bag you're holding at the end of the run (= maximum profit when all said and one) and you can also buy the new buttplug you've had your eye on for a few weeks.
- decentralized leverage - leverage is powerful but can also lose you money faster than anything else so be careful. But saying that, if you would like to be able to create a leveraged position in a decentralized way you can simply buy the asset, stake and lend it for stablecoins, then swap the stablecoins for more of the asset. You can repeat this over and over again, but the more restakes you do, the less wiggle room you'll give yourself on the price moving against you before you get liquidated. Use with caution, but still important to know it's there.
- yield farming - the difference between "staking" and "yield farming" is basically that the aim of yield farming is to find ways to gain more than just a single revenue stream from your capital. ie. I might stake ETH on Uniswap to get yield from that, but as a yield farmer I would be looking to stake ETH somewhere I could get a token that I could get more yield on and ideally stake that token too.. this would create 3 revenue streams instead of just one. Some YF strats are ultra complex but pay enormously. So lending can be used to yield farm - ie. you can stake ETH on AAVE and lend it, borrow USDT with the ETH as collateral, then trade that USDT for CAKE and stake that on PCS to get more CAKE.. you're then using your initial ETH in order to gain yield from lending it (you get a % rate of earning from lending), then you stake the CAKE and get more CAKE (rate of ~115% APR right now), then you also get profit if the price of ETH and CAKE both go up.. technically 4 individual profit generation mechanisms for a single amount of capital that you might have just HODL'd and only earned from the increase in the price of ETH.
(If I did the calculation here for the difference in ROI it's pretty interesting.. actually, just roughly for anyone that gives a shit... (hypothetical figures obvs)
Entry point price of ETH = 1800, exit point = 3600.
Entry point price of CAKE = 17, exit point = 25.
Lending Rate of ETH = 40% APR (inc. deduction for borrowing)
Staking Rate of CAKE = 115% APR
Starting capital = $1,000.
Period of time = 3 months
Scenario 1:
$1,000 of ETH * (3600/1800) = $2,000 at the end = $1,000 profit = 100% ROI
Scenario 2:
$1,000 of ETH * (3600/1800) = $2,000 at the end = $1,000 profit = 100% ROI +..
Starting w/ $1,000 of ETH at $1,800 each = 0.555 ETH = lending rate of 40% per year = 10% per 3 months = 0.0555 ETH earned => 0.0555 * 3600 = $199.80 +..
Borrow $500 CAKE against $1,000 ETH at 50% collat => $500/$17 = 29.41 CAKE borrowed at $17 each.
$500 of CAKE * (25/17) = $735.29 at the end = $235.29 profit = ~ 45% ROI +..
115% APR * (3/12) = 28.75% * 29.41 CAKE = 8.45 CAKE earned as yield in 3 months = 8.45 * 25 = $211.38 earn from CAKE stake.
= End Result (2000 + 199.80 + 735.29 + 211.38 = $3146.47) = Profit of $2146.47 = 214.65% ROI from the same $1,000 investment. More than double the profit essentially.
- There's a bunch more creative ways too.. eg. flash loans are based on lending (obviously) and there's a whole different set of ways to make cash monies from them.
So anyway, clearly worth looking into. I've got a few lends and a few loans happening right now and I wish I looked into it properly a while back.
Hope it helps someone <3
There are platforms in the defi space like Aave and Cream.Finance that are decentralized lending markets that allow you to get crypto-collateralized loans freely.
I've not had anything significant to do with lending until quite recently, but it's certainly an aspect of defi that many people can gain a lot of benefit from.
A few really good use cases:
- if you're holding bags for the long term and need some cash IRL for something else, you can stake and lend that crypto that you're going to hodl anyway, and get a loan of USDT, USDC, DAI etc which you can then liquidate and use. Then when you can pay back the loan, you'll get back your collateral. This is really useful if you would normally be in the position of having to sell some of your crypto to pay for something but then also realising that the price of that asset is likely to go up over the coming weeks and months. That way you can still maximise the size of the bag you're holding at the end of the run (= maximum profit when all said and one) and you can also buy the new buttplug you've had your eye on for a few weeks.
- decentralized leverage - leverage is powerful but can also lose you money faster than anything else so be careful. But saying that, if you would like to be able to create a leveraged position in a decentralized way you can simply buy the asset, stake and lend it for stablecoins, then swap the stablecoins for more of the asset. You can repeat this over and over again, but the more restakes you do, the less wiggle room you'll give yourself on the price moving against you before you get liquidated. Use with caution, but still important to know it's there.
- yield farming - the difference between "staking" and "yield farming" is basically that the aim of yield farming is to find ways to gain more than just a single revenue stream from your capital. ie. I might stake ETH on Uniswap to get yield from that, but as a yield farmer I would be looking to stake ETH somewhere I could get a token that I could get more yield on and ideally stake that token too.. this would create 3 revenue streams instead of just one. Some YF strats are ultra complex but pay enormously. So lending can be used to yield farm - ie. you can stake ETH on AAVE and lend it, borrow USDT with the ETH as collateral, then trade that USDT for CAKE and stake that on PCS to get more CAKE.. you're then using your initial ETH in order to gain yield from lending it (you get a % rate of earning from lending), then you stake the CAKE and get more CAKE (rate of ~115% APR right now), then you also get profit if the price of ETH and CAKE both go up.. technically 4 individual profit generation mechanisms for a single amount of capital that you might have just HODL'd and only earned from the increase in the price of ETH.
(If I did the calculation here for the difference in ROI it's pretty interesting.. actually, just roughly for anyone that gives a shit... (hypothetical figures obvs)
Entry point price of ETH = 1800, exit point = 3600.
Entry point price of CAKE = 17, exit point = 25.
Lending Rate of ETH = 40% APR (inc. deduction for borrowing)
Staking Rate of CAKE = 115% APR
Starting capital = $1,000.
Period of time = 3 months
Scenario 1:
$1,000 of ETH * (3600/1800) = $2,000 at the end = $1,000 profit = 100% ROI
Scenario 2:
$1,000 of ETH * (3600/1800) = $2,000 at the end = $1,000 profit = 100% ROI +..
Starting w/ $1,000 of ETH at $1,800 each = 0.555 ETH = lending rate of 40% per year = 10% per 3 months = 0.0555 ETH earned => 0.0555 * 3600 = $199.80 +..
Borrow $500 CAKE against $1,000 ETH at 50% collat => $500/$17 = 29.41 CAKE borrowed at $17 each.
$500 of CAKE * (25/17) = $735.29 at the end = $235.29 profit = ~ 45% ROI +..
115% APR * (3/12) = 28.75% * 29.41 CAKE = 8.45 CAKE earned as yield in 3 months = 8.45 * 25 = $211.38 earn from CAKE stake.
= End Result (2000 + 199.80 + 735.29 + 211.38 = $3146.47) = Profit of $2146.47 = 214.65% ROI from the same $1,000 investment. More than double the profit essentially.
- There's a bunch more creative ways too.. eg. flash loans are based on lending (obviously) and there's a whole different set of ways to make cash monies from them.
So anyway, clearly worth looking into. I've got a few lends and a few loans happening right now and I wish I looked into it properly a while back.
Hope it helps someone <3
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