Basic strategy : Lending
Last updated
Last updated
Each figure serves as an example. To get precise percentage figures, be sure to check the Whitehole Finance Market.
The loan interest rate may rise sharply depending on how often each pool is used. Always assess the market situation and check the utilization rate to determine whether the appropriate interest rate has been set.
As interest accumulates in gTokens, loan interest rises. Therefore, before exceeding the liquidation threshold, it is important to periodically check the debt ratio and reduce it through repayment or the deposit of new collateral.
In order to do this, a certain coin must be deposited and borrowed. In Whitehole Finance, if the GRV reward emission is 50:50 deposit & loan, the borrow margin interest can often be positive (+) as the deposit amount of provided assets is more than that of borrowed assets.
The compensation interest on the deposit and the loan interest can be offset during leverage farming, and it can even be profitable, if the loan margin interest (Net APR) is negative (-).
Considering the first case, with the USDT pool's LTV at 70%
100 USDT deposit → 70 USDT borrow
70 USDT deposit → 49 USDT borrow
49 USDT deposit → 34.3 USDT borrow
34.3 USDT deposit → 24.01 USDT borrow
……
Total assets against the initial deposit amount will be 330 USDT, and total liabilities would be 230 USDT if you keep doing it until you are unable to borrow any more.
When the loan interest is 2% APR (-5% loan interest + 7% GRV reward) with just the first 100 USDT, you will have an increased leverage farming effect that will allow you to earn a total profit of 2.76x by farming + lending interest to 330 USDT.
Currently, the APR of USDT is 10% (4% Deposit Interest + 6% GRV Reward). Holders with better EcoScores can also receive additional boost interest rates with GRV lock-up for safer and more reliable income.
Collateral deposit → borrow → swap to stable or other assets → collateral deposit
It is the same as being short on the borrowed coin to deposit one coin, borrow another, and sell it.
For instance, user A wants to short ETH in the expectation that it would decline.
To post a loan, User A needs collateral assets
User A deposits 100 USDT.
borrow 0.5 ETH (50$).
Sell (swap) 0.5 ETH. (+50$)
The value of ETH then decline. At this time, 0.5 ETH is $25.
The user pays off the debt by spending $25 to purchase 0.5 ETH.
The user revenue -> 25 USDT.
Applying this part might result in leverage.
ex) Deposit asset A → Receive a loan for asset B that is likely to decline and sell → Re-deposit as collateral → Repeat
You can gain earnings by paying back the cheap asset B with asset A at the conclusion of leverage farming with higher collateral.
Here, through GRV lock-up, all GRV reward benefits granted to both deposits and loans may be increased. The interest on the loan might be increased by a positive amount by boosting if the Net APR at the time of the loan was -2%, enhancing the position's worth. Through GRV lock-up, many application strategies are possible in Whitehole
Collateral deposit → stable loan → token swap → collateral repeat
It is equal to being long on the borrowed coin to deposit one coin and borrow another to purchase further collateral coins.
For instance, user A wants to buy a long position in WEMIX because they believe it will rise.
To post a loan, User A needs collateral assets.
User A deposits 1 ETH.
Borrow 50 USDT (=0.5 ETH).
Swap 0.5 ETH to 50 USDT.
The value of ETH doubles after that. 0.5 ETH is currently 100 USDT.
After purchasing 50 USDT, the user sells 0.25 ETH to pay off debt.
The user revenue -> 0.25 ETH.
By using this in combination with the leverage farming mentioned above, you may increase your profits.
ex) Depositing asset A → Stable loan → Purchase asset A and re-deposit as collateral → Repeat
You can earn profits at the end of leveraged farming with greater collateral by repaying stable loans with more valued A assets.
Here, through GRV lock-up, all GRV reward benefits granted to both deposits and loans may be increased. The interest on the loan might be increased by a positive amount by boosting if the Net APR at the time of the loan was -2%, enhancing the position's worth. Through GRV lock-up, many application strategies are possible in Whitehole.
