ADX Now Available on Yield Credit: Everything You Need to Know
Posted by AdEx Network on June 21st, 2021InsightsDeFiADX
Earlier this week we announced that our native token ADX is now available on Yield Credit for borrowing and lending. With this, we are adding one more use to ADX and making sure that all token holders are able to make the most of their assets.
Just before the token was listed, we held an AMA (Ask Me Anything) session with the Yield team on our Telegram chat. Our community was excited about this partnership, and submitted many great questions for the AMA. Here’s a recap of the most important of them.
We first asked the Yield team to give us a brief overview of what Yield Credit is and what gives it advantage to similar products. Here’s what they had to say.
The Yield Credit Lending Platform is defined by three pillars:
1. We incentivize borrowers when they borrow and nurse loans taken to maturity (i.e. repay loans).
2. All fees generated by the platform are used to buy back and burn the YLD token.
3. Interest rates are fixed while loans are individualized, i.e. they occur between two persons on the Ethereum blockchain.
It is important to place some emphasis on the fixed interest rate pillar. It is something you hear many other projects tout but few actually follow through on this. Often, in the fine print, there are caveats that soften the return once promised.
Currently there 5 stablecoins, wrapped ether and a few other selected assets available for lending and borrowing on Yield, with ADX being the latest addition:
Our community then asked to learn more about the YLD token - what are its use cases, where can you trade it, etc.
The YLD token plays a central role on the Yield Platform. It is a standard ERC-20 token with minting and burning functionality. Borrowers can earn YLD with every loan they repay on time. Lenders and borrowers that stake 50 YLD receive discounts on platform fees, lower loan liquidation ratios, and higher YLD rewards. All fees on the platform are used to buy back YLD from the open market and burn it.
YLD is also traded on Sushiswap. The token supply is not fixed, it’s dynamic. YLD token is purchased and burned with 100% of the fees generated on the platform, creating buy pressure. When our borrowers repay loans timely, they are afforded the right to mint new YLD tokens as a reward, possibly creating some sell scenarios.
Is YLD a governance token?
YLD is not a governance token but a utility one. Presently we have no plans to set up a governance token. There are still some uncertainties surrounding how governance tokens should be treated. Until those are straightened out we will keep to the utility token.
That said, as we grow and as more legal clarity appears surrounding DAOs, we may reach a point that becomes of use for the Yield community.
Once we knew more about Yield, naturally we wanted to move on to AdEx-related questions. The first one was how did the Yield team decide to list ADX and what about our company and products grabbed their attention.
Interestingly, I came into crypto around the time AdEx was launched in 2017. I remember that time quite well. The 2017 crypto market was full of great ideas but we just had a poor funding model (in terms of ICOs) which led to many projects gambling with funds and ultimately getting hit hard by the bear market. I like to see projects that have weathered that storm and are still standing - it says A LOT.
Apart from this, I think compared to 2017 we are seeing fewer great ideas in crypto and a whole lot more copying. Sure, finance is a great industry to showcase what blockchain has to offer but I do like to see and know that there are other use cases - enter Adex.
In addition, I also believe that the privacy and fraud riden advertising world needs solutions like Adex.
It was an easy choice. But just to make it clear to your community we simply asked. In the end, Yield is not looking to become a very prominent / visible organization. In fact there is no organization behind us. We are a community driven project and all we strive for is to have a platform that others can use. The AdEx community can thank their fearless leaders for this development that is adding lending to the healthy list of utility the AdEx token offers.
What is the benefit of having ADX listed on Yield?
The biggest benefit of having it listed is that this offers you a way to obtain liquidity without losing your ADX position. Once you repay the loans + interest + some platform fees (don’t forget pesky gas costs) you receive the collateral back. As a borrower you would have avoided sell pressure on the token gained access to $$.
It is no small thing that any token that has a Chainlink feed can be used as collateral on our platform. This is a huge step away from the gate-keeping currently happening on many other lending platforms.
We feel that every token out there (on Ethereum, but soon we will be on FTM and Polygon too) should be able to provide the utility of lending to their community. You can compare it to what Uniswap did 3 years ago with removing listing fees for trading a token. Similarly, we are removing roadblocks (high listing fees) to bringing lending to as many projects as we can.
What is the lending/borrowing period for ADX on Yield Credit?
Yield Credit is an individualized lending platform. This is quite different from many other platforms out there that utilize a pooling system. On the Yield Platform, every lender or borrower chooses what rate they want to lend or borrow at. Lenders can create lending offers, and so can borrowers. As part of the offer creation, each party must add terms such as interest rates, and duration of the loan to that offer.
Now - since all of these items such as offer making occurs on-chain, there are gas fees involved. As such you will often find lenders or borrowers enter our Telegram group with proposals such as “who wants to lend me 20k USDC @5.5% for 21days with (30k) ADX as collateral”.
It is handy (and saves you gas fees) to agree on terms before the loan is put up just so that you know that there are takers (borrowers or lenders) ready to scoop the offer up.
Is there any maximum/minimum on the time for a loan or on the amount of tokens?
Yes. Loan terms on Yield range between 10 and 60 days, and interest rates are only between 2% and 12.5%. Borrowers or lenders can choose within this range. Loan principals can range from 1k$ to 50k$.
What is the process of borrowing/lending assets on Yield?
It works like any other on-chain action you wish to enter into. You have to connect your wallet to the Yield Platform (Metamask, TrustWallet, etc). Once there and if you are borrowing, you click on the borrowing tab (if you are lending you click on the lending tab). Assuming you are borrowing and click on the borrowing tab you see some existing offers from lenders. If you don’t find any you like, you can come negotiate in our Telegram for the type of loan and terms you want, or you can put up a borrowing offer.
Here is an example of a borrow offer from the YLD alert bot created by one of our community members:
❓ New borrow request (seeking lender):
Principal amount: 30000
Principal token: USD Coin
Collateral amount: 60959.3986494
Collateral token: AdEx
Duration: 31 days
Can users use LPs, staked tokens or even NFTs as collateral for loans?
Currently, all tokens available on Yield have Chainlink price feeds for security. If any LPs have such a feed, they would certainly be eligible for consideration. At this time, however, we don’t have any LP tokens supported. The problem with NFTs is much more difficult since they are unique. You would need a way to gauge their value at any given time.
For example, setting aside the lack of price feed, a user could purchase their own NFT for 10 ETH using another account, post it as collateral to borrow 5 ETH, and then run away with 5 ETH and leave the lender with a potentially worthless NFT.
However, if the NFT was something like a Uniswap V3 LP, that is something that could potentially be done just like any LP, although still much more complicated than a Uniswap V2 LP.
What else can we look forward to in the roadmap for Yield Credit?
There is a lot coming. We can’t share precise details but the V2 variant of our platform will see a shift into a pooling feature. Rather than the manual setup we have now, we will introduce pooling like many others. However our DNA will not be lost. Returns on loans will be determined by lenders and borrowers (NOT the platform), interest rates will be fixed, and borrowers that repay loans will be incentivized.
This is a significant undertaking. A complete restructure of how our smart contracts work is needed, as well as the mechanics behind the flow of value on the platform. We are very excited to show the community what we have been up to. They will not be disappointed.
Expansion into FTM and Polygon can be expected too.
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