Collateralized Lending, think Bitcoin and Ether
- One of the huge financial tools on Ethereum is Sky, previously called Maker, the Crypto Bank on the Ethereum Blockchain, which alows you to take out loans against your Ether, the utility token used to pay transaction fees on the Ethereum Blockchain for all it's applications. When I say huge, I mean hundreds of millions of dollars in volume.
- Unfortunately, we don't have collateralized lending on the Hive Blockchain, for our Hive token or our stablecoin Hive Backed Dollars. And we also don't have lending on our L2 chain, Hive-Engine, so none of the L2 tokens like Leo, Pal, etc are currently used as collateral for loans.
- But now that we are listed in a trading pair on cacaoswap, a decentralized exchange on the Maya Blockchain, our token Leo will be one of the assets we will be allowed to deposit and borrow against when Maya Protocol starts a lending playform. This is great news, and perhaps was one of the overlooked aspects of the short talk Khal gave on the Maya Protocol X- Space months ago:
When collateralized lending goes live on Maya, LEO will be one of the assets available to collateralize for a loan.
So now we've solved the problem of launching lending without actually having to launch lending. Perhaps this shows you why I value being at the cross-section of projects like Maya Protocol. We benefit from the adjacent development of other teams that are hard-charging in the space. As Maya grows, LEO grows. As Hive grows, LEO grows. A rising tide raises all ships.
How Does It Work?
The feature isn't live on Maya (yet) but when it does go live, the gist of it is this: You'll be able to collateralize your LEO on the Maya Protocol, take out a stablecoin loan against it and then pay it back at any point in the future. The loan will be backed by your LEO tokens that you put up as collateral. A variable interest rate will be charged on the loan. That interest will get paid to Liquidity Providers in the LEO:CACAO pool.
Another things here, you can also miss, if you are not attentive
The interest from the borrowing against Leo is paid to the Leo-Cacao trading pair liquidity providers. This boosts the amount they earn for providing Liquidity. Thus incentivising more liquidity provision and enlarging the leo-cacao pool, so swaps of larger sizes are possible, with less cost to traders, i.e. slippage.
Leo Founder @khaleelkazi also noted the importance of this to the Hive ecosystem also.
One of the fascinating parts of this design from the Maya team is that it actually builds more incentives for being a LEO:CACAO liquidity provider.
This is extremely important because it leads to more potential liquidity in the LP... which means that HIVE Aggregated Swaps also have more potential (in terms of lower slippage and larger trades).
The fundamental premise for all of this is that our aim is to grow the HIVE trading volume that is happening on Decentralized Exchanges.
Amazing Development is happening on Inleo, Cacaoswap and Maya Protocol
- The future of Inleo looks very bright, but in order to see it, you need to drill down on the items discussed in the talks. read the White papers and listen to what the Founders are telling you.
- I will discus this more in my Subscriber Content, so Subscribe now for more detailed information.