Liquid Loans is now LIVE!
And the time to prepare for launch is officially over.
Here’s what you need to know now that the protocol is live on mainnet.
How the Early Incentives Work
Of course the 0% interest feature takes all the headlines.
Why wouldnt it? It’s one of the greatest functions in all of DeFi.
But there are few other incredible features and opportunities that phase out of the Liquid Loans protocol early.
Providing liquidity for the USDL/PLS pair on PulseX v2 in the first 42 days of launch has big upside.
You will have your natural position of taking fee’s as an LP provider would, but also a LOAN payout!
This will work similar to farms on a DEX where a pair has extra incentives (Think INC farms on PulseX).
This is one of the most overlooked ways to get LOAN token.
The other is a little trickier, but very interesting. Arbitrage on USDL.
Redemptions are not available until 14 days after the contracts are deployed.
This will make USDL less sensitive to its USD peg.
To learn exactly how to do this, use our guide on how to arbitrage USDL for profit.
There are many ways to take advantage of this. Do with this information what you will.
Total Collateral Ratio (TCR) Isn’t Everything
While you do want to maintain a safe collateral ratio, a huge part of your position is how liquid your assets are.
When thinking about TCR, your ability to pay back quickly and at what cost effect where you choose to be.
If you are in something like the Stability Pool, moving that USDL back to your vault or taking PLS rewards to top up your vault are readily available.
This would allow you to be more aggressive or efficient in how you handle your vault TCR.
The inverse is also true.
The more liquid and skilled, the easier it is to safely use a lower TCR.
The less liquid and the more hands off, the higher the TCR should be.
Your Position Is Not Static
What if PLS drops 90%?
Crypto does make dramatic drops. Often.
So do you need to maintain a position that is protected against it? Not necessarily.
Your vault is not static. You can add PLS, payback USDL, take your yield and gains along the way to improve your position as you go.
Similar to the section above, staying liquid allows you to do many things along the way.
It’s not that you take X position and wait for Y disaster. You have many options.
Take the time to really plan how you intend to manage all the facets and where you can improve.
The Bottom Line
We can’t know everything and we can’t predict markets.
But we can take the time to understand the great tools we have and how to best use them.
It’s not 10000 kicks 1 time, it’s 1 kick, 10000 times.
Testnets and repetition make all the difference. Knowledge is power. Keep learning!
WaLLrus
WaLLrus is the Global Head of Growth and Partnerships at Liquid Loans, and host of The Weigh In With Wallrus podcast series. He has been in the crypto space since 2015, and is widely recognized as a DeFi thought leader and strategist.