You might already be familiar with lending protocols such as Aave on Ethereum and the many protocols on Fantom such as Scream, Granary, Geist (and also Aave). The general idea isn’t hard to grasp. Put up some collateral, borrow assets against it. Most people would think of this as a tool to leverage long positions or to create short positions in the absence of a centralised exchange. While these are great primary use cases, you can further utilise these protocols to manage your risk exposure while continuing to farm yields at relatively lower-risk too.
Since market conditions are bearish, users might want to hold on to their stablecoins or big cap positions especially since we don’t know what direction the market will go. W̶h̶i̶l̶e̶ ̶y̶o̶u̶ ̶c̶o̶u̶l̶d̶ ̶b̶e̶ ̶f̶a̶r̶m̶i̶n̶g̶ ̶s̶t̶a̶b̶l̶e̶c̶o̶i̶n̶ ̶y̶i̶e̶l̶d̶ ̶a̶t̶ ̶2̶0̶%̶ ̶A̶P̶Y̶ ̶o̶n̶ ̶A̶n̶c̶h̶o̶r̶ ̶w̶i̶t̶h̶ ̶U̶S̶T̶ ̶o̶n̶ ̶T̶e̶r̶r̶a̶ ̶(̶v̶e̶r̶y̶ ̶o̶p̶t̶i̶m̶i̶s̶t̶i̶c̶ ̶e̶s̶t̶i̶m̶a̶t̶e̶)̶ (well this aged poorly), what if I told you, you could be farming more than that with the use of loans?
According to Granary, you can only borrow up to 80% of your collateral’s value. What we’ll do here is lend USDC and use it as our…
