PolyCub Loans: Let the Lion Roar!
PolyCub Collateralized lending will possess features to prevent mass liquidations and price crashes.
- In Collateralized loans, the borrower provides assets like PolyCub as security for the loan.
- In Collateralized loans the loan to asset ratio determines how much you can borrow and at what point your security assets would be liquidated, which means when your assets would be sold to cover your loans if the market price of PolyCub falls.
- For Example, you deposit 10 PolyCub, and borrow the equivalent of 7 PolyCub. That would be a 70% position, and your assets would be sold to cover the loan if the price of PolyCub dropped to 70% of the starting price, say from 10 dollars to 7 dollars.
- Which means that if the market price drops below 7$ in the above example, your PolyCub assets would be sold to satisfy your loan.
- This sale is called a Liquidation.
- Unfortunately the first platform to offer these loans: MakerDao has automatic liquidations. Which means your assets are sold automatically, and without warning, whenever the market price falls to the critical number, such as 7 in the above example.
- But Leofinance Polycub will not have automatic liquidations, instead it will feature a 3 day warning for you to add capitol to avoid Liquidation.
- Additionally Leofinance Polcub will also feature a banner everyday when you sign in, telling you if your loan is in danger of liquidiation, so you can add capitol to prevent liquidation.
- This warning banner will be called Loan Health to let you know your relative risk of liquidation. For example, in the above example your position is 70% and the banner will indicate how close you are getting to your liquidation number.
- Additionally, to prevent further price crashes from liquidations being sold into the general market and creating more selling pressure, which would further lower the price, Khal is planning an alternative. Polycub will not sell liquidated PolyCub assets on the general market, but will instead sell it to the Bonding Market, where there is a delay of 7 days. This will prevent a spiral of price drop, large market sale liquidations of PolyCub, which produce more selling pressure on price, more price drop and further liquidations, more selling, more price drop and more liquidations.
Last words
I think providing collateralized loans is a gamechanger all by itself, but adding these additional safety features to PolyCub Lending, plus the other great features of PolyCub like Protocol Owned Liquudity, and PolyCub Bonding make tis protocol stand out in the crowd of Projects on Polygon.
I think all these things put together make PolyCub a beast!
Watch out below cryptocurency world, PolyCub is about to drop PolyCub Lending into the mix, and change the Protocol landscape forever.
Leofinance is going to let the lion roar!