Liquidity Markets
Supply-Side: Earning Interest By Providing Liquidity
The Curvance protocol enables users to earn yield by supplying assets to borrowers in its peer-to-peer lending markets. Depending on the market, most deposits can be used as collateral, allowing users the ability to borrow against their holdings. Assets supplied solely for lending, however, cannot be borrowed against.
Characteristics
Common Borrowable Assets:
Stablecoins: Stablecoins are commonly borrowed by users who want to improve their net DeFi strategy yields.
Volatile Non-Yield-Bearing Tokens: Volatile Non-Yield-Bearing Assets are commonly borrowed by users who want to create cross-token strategies such as longing BTCETH or farming staked ether yield.
Adding New Supported Tokens: New tokens can be introduced as lending options by the Curvance DAO, expanding opportunities.
How It Works for Lenders
When users deposit tokens into Curvance as lenders, they receive a proportionate amount of eTokens (earn tokens), representing their share in the lending pool. Earned interest is automatically compounded, increasing the user’s overall position over time.
Key Benefits of Lending:
Instant Yield Access: Users can deposit into earning positions for no cost and immediately earn yield on their assets.
Automatically Reinvested Yield: Interest on outstanding debt is managed by automation across all positions for all users simultaneously, continuously reinvesting accrued interest back into all user's positions.
Instant Liquidity Access: After a 20-minute cooldown period, lent liquidity can be redeemed at any time unless there is 100% utilization in that particular market.
Demand-Side: Supercharged DeFi opportunities
Curvance offers users on the demand side various options to generate yield and access liquidity by borrowing against their deposited assets. Deposited assets are routed to all supported yield opportunities. Users can then use them as collateral to access new liquidity.
Characteristics
Common Depositable Assets:
Interest-Bearing Stablecoins: Stablecoins are commonly borrowed by users who want to improve their net DeFi strategy yields.
Liquid Staked/Restaked Tokens: Assets such as LSTs are natively supported, offering streamlined yield generation.
LP Tokens: More complex assets, such as LP tokens for AMMs, Perps, CLOBs, etc., benefit from auto-compounding, optimized yield generation, and improved user experience.
Adding New Supported Tokens: New tokens can be introduced as deposit options by the Curvance DAO, expanding opportunities.
How It Works for Depositors
When users deposit tokens into Curvance, they receive a proportionate amount of pTokens (position tokens), representing their share in the managed vault. Earned yield is automatically compounded, increasing the user’s overall position over time.
Key Benefits of Depositing:
Instant Yield Access: Users can deposit into earning positions for no cost and begin earning yield on their assets immediately.
Instant Liquidity Access: Deposited assets can, in most cases, be collateralized, allowing access to borrowed liquidity against the market value of deposited assets.
Automatically Reinvested Yield: Yield on deposited assets is managed by automation across all positions for all users simultaneously, continuously reinvesting accrued yield into all users' positions.
Economies of Scale: By pooling all users' positions together, any managed actions are executed for all users simultaneously, minimizing automated management costs. For example, If 10,000 users deposit into a particular asset vault, auto compounding operations are executed for all 10,000 positions at once, reducing user costs by (9999 / 10000) 99.99%.
Enabling Collateralization for Borrowing
To enable an asset as collateral, users can follow these steps:
Go to the main dashboard to view all deposited assets.
Locate the assets to be used as collateral.
Enable the desired assets as collateral using the "Increase Collateral" button.
Note: When enabled, the corresponding deposited assets continue to earn yield, ensuring efficient capital utilization across DeFi.
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