💸Borrowing & Lending
What is the process of borrowing through Yamfore?
Collateral and Fees:
To initiate a loan position, users must first deposit ADA as collateral. A one-time, fixed CBLP flat fee applies, calculated based on the total USD value of the deposited ADA. This fee, payable exclusively in CBLP tokens, fuels the protocol's growth and is subsequently removed from circulation, fostering long-term sustainability.
Loan Ownership and Management:
Upon successful collateralization, borrowers receive a unique, non-fungible token (NFT) representing their loan position. This NFT serves as verifiable proof of ownership and facilitates future actions such as collateral redemption or participation in various trading strategies within the Yamfore ecosystem.
Loan Parameters and Interest:
The loan-to-value ratio and annual interest rate are community-governed parameters established by CBLP token holders. While interest accrues over the loan term, borrowers are not required to make regular repayments, offering a simplified and flexible management experience.
Staking Rewards and Liquidity:
During the loan period, the Yamfore protocol utilizes the deposited ADA for staking, accruing rewards on behalf of the borrower. These rewards contribute to an ADA exchange pool, incentivizing arbitrageurs to provide stablecoins in exchange for discounted ADA. This mechanism enhances platform liquidity and fuels demand for CBLP tokens.
Revenue and Repayment:
Yamfore generates revenue through the aforementioned CBLP flat fee, accrued interest, and staking rewards. Upon closing their loan position, borrowers repay the principal and accrued interest, regaining their deposited ADA. Repayments contribute to the stablecoin treasury, ensuring sufficient liquidity for future loan opportunities. Conclusion By offering these unique features, Yamfore deviates from conventional crypto-backed loans, presenting itself as a compelling option for those seeking exposure to ADA's potential price appreciation while retaining collateral ownership and enjoying flexible loan management.
Elimination of Margin Calls and Liquidation Risk: Fluctuations in ADA's price do not trigger forced asset sales, providing peace of mind for borrowers.
Absence of Ongoing Interest Payments: Borrowers enjoy flexibility without the burden of fixed repayment schedules.
Indefinite Loan Terms: Manage your loan at your own pace and close the position whenever convenient.
What determines the CBLP Flat Fee?
The CBLP flat fee, set through governance by CBLP token holders, acts as a dynamic lever during periods of high and low demand. When demand surges, CBLP holders can vote to increase the fee, requiring borrowers to commit more CBLP tokens. This fuels demand for CBLP in the open market, benefiting holders. Conversely, during low demand, the fee can be adjusted downwards, ensuring efficient utilization of the protocol's treasury.
What stablecoins will Yamfore utilise?
Yamfore leverages a dynamic pool of Cardano-native stablecoins backed by verifiable on-chain assets. While the initial launch prioritizes these solutions, the protocol remains adaptable to integrate additional stablecoins in the future. To prioritize capital efficiency, Yamfore treats received stablecoins as transient assets, immediately lending them out to borrowers. This means stablecoins never linger in the treasury for extended periods. The specific stablecoin borrowers receive depends on real-time availability at loan initiation.
How much can I borrow?
Borrowing is open to all individuals, with a minimum loan amount established. However, there is no upper limit on the amount you can borrow, provided sufficient funds are available in the protocol's stablecoin reserve.
How does lending work?
Yamfore boasts a unique protocol-owned stablecoin treasury that funds all crypto-backed loans. This innovative approach eliminates counterparty risks for lenders and empowers Yamfore to offer dynamic and competitive lending terms, setting it apart from traditional DeFi models.
How often, and how much are the repayments for a loan?
Borrowers do not repay interest continuously. Instead, the interest for a loan position accrues and is only payable when the loan position is closed. Upon the repayment of the principal and all accrued interest, the borrower will receive the entirety of their deposited ADA collateral back.
What is the interest charged on a loan?
Instead of making regular interest payments throughout the loan term, borrowers with Yamfore pay a fixed annual interest rate calculated on their initial loan amount. This accrued interest is added to the outstanding principal balance every epoch.
Example: A borrower taking a $100,000 loan at a 7% annual interest rate would accrue $7,000 in interest per year. Broken down further, this translates to roughly $95.89 in interest added to the loan balance per epoch (calculated as $7,000 / 73 epochs).
While the protocol holds the borrower's collateral (ADA) in custody, borrowers forfeit any potential staking rewards earned on it as part of the loan agreement.
What happens if the value of my deposited collateral falls?
Simply put, nothing, market volatility poses no risk to a borrowers deposited collateral. The Yamfore protocol assumes the responsibility for price fluctuations, enabling highly competitive loan terms unmatched by traditional lending protocols / platforms.
What is the CBLP Treasury?
The CBLP Treasury acts as a central reserve within the Yamfore protocol, holding a significant portion of the CBLP tokens, the protocol's native governance and utility token. This pool of tokens serves a crucial purpose: attracting users to contribute liquidity to the Yamfore ecosystem. By depositing their stablecoins into the designated CBLP auction portal, users essentially participate in a discounted sale, acquiring CBLP tokens at a lower price than the prevailing market rate. This economic incentive encourages users to actively contribute to the protocol's liquidity.
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