Lend & Borrow
Lend tokens to earn passive interest and borrow WEMIX, WEMIX$, and stWEMIX upon collateral.
Safely manage portfolios with the help of the Status Monitor
Notice will be provided so that the collateral will not be liquidated.
Deposits, loans are compounded and fees are included when repaying the loan.
What is Lend & Borrow?
WEMIX.Fi's Lend&Borrow is a lending service that utilizes over-collateralization. Users can deposit assets to earn income or borrow other assets using their deposit as collateral. The collateral must have a higher value than the loan, and interest must be repaid along with the loan when it is due. Due to the nature of the over-collateralized loan service, the total deposit amount of the protocol is always maintained larger than the total loan amount, and if the total loan amount is imminent to the total deposit amount, withdrawal may be restricted. If the collateral's value drops below the value of the loan, the protocol will liquidate the collateral through an auction and repay the loan.
Depending on market conditions, the deposited collateral and loaned assets can experience rapid value fluctuations. Liquidation may occur if the value of the collateral decreases or the value of the loaned assets increases. WEMIX.Fi provides a status monitor to help you manage your assets securely. However, it is essential to be aware of liquidation risk when lending at high percentages.
Supply and borrow markets
WEMIX.Fi currently supports the lending and borrowing of the following tokens.
| Asset | Asset Type | Deposit | Borrow | LTV | Borrow Cap |
|---|---|---|---|---|---|
WEMIX$ | Stable | O | O | 85% | - |
WEMIX | Volatile | O | O | 75% | - |
stWEMIX | Volatile | O | O | 55% | 27,343.75stWEMIX ($35K) |
An LTV(Loan-To-Value) is a term that describes the ratio between the amount of a loan and the appraised value of the underlying collateralized asset. The LTV(Loan-To-Value) of each asset varies for each token based on the token's volatility. For example, a stablecoin such as WEMIX$ has a high LTV compared to WEMIX because of its low risk of volatility. Different LTVs for different assets mean that even if an equal value of assets is deposited, the available amount for a loan will differ based on the asset's LTV.
For instance, if a user deposits $100 each of WEMIX and WEMIX$, the total deposit would be worth $200. However, only $160 will be available for a loan, based on the LTV.
WEMIX.Fi limits the maximum loanable amount to protect users from the risk of liquidation and high borrow interest rates. Lending up to 80% of $160 is possible, but liquidation will occur if it exceeds 100% due to market fluctuations.
Some assets have a maximum borrowing cap due to their qualities and liquidity. Borrowing particular assets may be temporarily restricted if the total loan reaches or exceeds the limit. Users can check the status through the guidance banner or the icon at the top of the screen.
Status Monitor
WEMIX.Fi offers a real-time monitoring service for secure collateral management. Users can check their current collateral and loan status through the status monitor, which displays the current loan amount as a percentage of the loanable amount based on the user's collateral value.
Regular monitoring of asset price fluctuations and the status monitor can help users manage their finances by depositing additional collateral or repaying loans.
The status monitor is divided into 5 stages, with alerts and restrictions in place during the 'Risk' and 'Liquidation' stages to prevent liquidation. Users are advised to regularly monitor their collateral status and take appropriate actions to maintain the safety of their assets.
| Status | Conditions | Explanation |
|---|---|---|
Safe | Under 30% of the max. loanable amount | Financial status is safe and there is more room for additional loans. |
Stable | From 30% to 60% of max. loanable amount | Financial status is stable and there is more room for additional loans. |
Caution | From 60% to 80% of max. loanable amount | Financial status requires careful monitoring as certain market conditions may put the collateral at risk. |
Dangerous | From 80% to 100% of the max. loanable amount | Financial status is dangerous as liquidation is imminent. Make additional deposits or repayment to avoid liquidation. |
Liquidation | Over 100% of the max. loanable amount | The assets are to be liquidated. |
Use cases of Lend&Borrow
Access to temporal liquidity
Bob had an unexpected expense on the 22nd and needed cash, but didn't want to sell his WEMIX which he believed would increase in value. He turned to WEMIX.Fi's Lend&Borrow service and deposited WEMIX as collateral to borrow WEMIX$. This allowed Bob to pay his rent without having to sell his WEMIX. After receiving his salary on the 25th, Bob repaid the loan and returned the collateral, resulting in a successful use of the Lend&Borrow service to meet his liquidity needs without impacting his investment in WEMIX.
Realizing short-selling strategy
Alice's analysis concluded that overall economic conditions were bad and that all assets would fall. She made use of the Lending service by depositing her safe asset WEMIX$ as collateral and borrowing WEMIX, which she then sold for a profit. When the value of WEMIX dropped, she bought it back and used it to repay the loan, thus earning an additional $1,000. However, this strategy also involves taking a risk and assumes that Alice's analysis of the market conditions is correct.
Realizing profit leveraging assets
Charlie believes that the value of WEMIX will rise further. Charlie believes that the value of WEMIX will rise, so he deposited his existing WEMIX as collateral and borrowed WEMIX$ to purchase additional WEMIX. After the value of WEMIX increased from $1 to $2, Charlie sold the additional WEMIX he purchased on loan, paid back the WEMIX$ he borrowed, and returned the original WEMIX collateral. By using the lending service, Charlie was able to increase his earnings from $1,000 to $1,500.
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