Below is a write-up of answers to the questions from the recent AMA held at AdEx Network Official Telegram on Friday 11th of June, with the AdEx team and the members of the Yield Credit team discussing about Yield Credit & the listing of $ADX.
Question (Georgi | AdEx Network): Tell us a few words about yourselves and how you decided to start the project, what motivated you in the first place.
Answer (TOB): At an elementary level the Yield Credit Lending Platform is defined by three pillars
1. We incentivize borrowers when they borrow and nurse loans taken to maturity (i.e. repay loans).
2. All fees generated by the platform are used to buy back and burn the YLD token.
3. Interest rates are Fixed while loans are individualized. I.e. they occur between two persons on the Ethereum blockchain.
It is important to place some emphasis on the Fixed Interest rate pillar. it is something you hear many other projects out. But few actually follow through on this. Often, in the fine print, there are caveats that soften the return once promised.
As for myself — background wise I am an attorney. Our team / my colleagues have backgrounds in banking, and developing applications both on the blockchain and on other more traditional operating systems
Our lead developer @coiner_ is the brainchild of the project. We are a self-funded project. We have not raised any funds, no ICO, no VCs, just an airdrop to the several hundred that were involved with the project before the token was floated in December and the platform went live in March.
Question (Georgi | AdEx Network): Can you tell us more about the YLD token — usage, where can you trade it, use cases.
Answer (Shai): Yield (YLD) is a standard ERC20 token with minting and burning functionality. Borrowers can earn YLD with every loan they repay on time. Lenders and borrowers that stake 50 YLD receive discounts on platform fees, lower loan liquidation ratios, and higher YLD rewards. All fees on the platform are used to buy back YLD from the open market and burn it. YLD is also traded on Sushiswap.
Answer (TOB): Thanks Shai — To add to that the YLD token plays a central role on the Yield Platform. You may have noticed that our token supply is not fixed. It is dynamic. As Shai mentions the YLD token is purchased and burned with 100% of the fees generated on the platform, creating buy pressure. When our borrowers repay loans timely, they are afforded the right to mint new YLD tokens as a reward, possibly creating some sell scenarios (or not ;-))
Question (Georgi | AdEx Network): Thanks guys, this is really innovative and useful, a great incentive for your users to use the platform even more.
We didn’t speak for the variety of tokens that you offer for lending/borrowing, what other crypto-assets do you offer on your platform?
Answer (TOB): Let me share a chart that also includes our collateral Ratios on the platform:
Question (Georgi | AdEx Network): You didn’t mention if YLD is a governance token and if it gives you any special power holding it.
Answer (TOB): YLD is not a governance token. It is an utility token. Presently we have no plans to set up a governance token. There are still some uncertainties surround how governance tokens should be treated. Until those are straightened out we will keep to the Utility token.
That said as we grow and as more legal clarity appears surrounding DAOs we may reach a point that becomes of use for the Yield community.
Question (Georgi | AdEx Network): Thank you TOB, great clarification on the matter as it was one of the first questions that came in. Let’s jump to another one now:
What will be the lending/borrowing period for ADX on Yield Credit?
Answer (TOB): Yield Credit is an individualized lending platform. This is quite different from many other platforms out there that utilize a pooling system. On the Yield Platform, every Lender or Borrower chooses what rate they want to lend or borrow at. Lenders can create lending offers, so too can borrowers. As part of the offer creation, each party must add terms such as interest rates, and duration of the loan to that offer.
Now — since all of these items such as offer making occurs on-chain there are gas fees involved. As such you will often find lenders or borrowers enter our TG group, with proposals such as, “who wants to lend me 20k USDC @5.5% for 21days with (30k) ADX as collateral”. This example assumes ADX is 1 dollar to make the math easy for me :-)
It is handy (and saves you gas fees) to agree on terms before the loan is put up just so that you know that there are takers (borrowers or lenders) ready to scoop the offer up.
The loan term on Yield is never more than 60 days and interest rates are only between 2% and 12.5%. borrowers or lenders can choose within this range. Loan principals can range from 1k$ to 50k$.
Question (Georgi | AdEx Network): While you were writing, came a question on private from our community, is there any maximum/minimum on the time for a loan or the amount of tokens?
- 10–60 days for the term
- $1,000-$50,000 USD for the loan value
Question (Georgi | AdEx Network): A little bit of the same from above, but yet another question that we got just now, can you describe with just a few sentences the whole process of borrowing/lending funds on Yield? Some of our users are not familiar with it and wanted a bit of clarification
Answer (TOB): It works like any other on-chain action you wish to enter into. You have to connect your wallet to the Yield Platform (metamask trust wallet etc). once on there and if you are borrowing, you click on the borrowing tab (if you are lending you click on the lending tab). assuming you are borrowing and click on the borrowing tab you see some existing offers from lenders. if you don’t find any you like, you can come to negotiate in our TG for the type of loan and terms you want, or you can put up create a borrowing offer.
Here is an example of a borrow offer from the YLD alert bot created by one of our community members.
In this case, Ampleforth is being used as the collateral.
And that is what it looks like when the loan is taken
If you sit back and ask yourself how does this help Adex — the reality is it is providing you with an avenue to obtain liquidity without losing your $ADX position. Once you repay the loans + interest + some platform fees (don’t forget pesky gas costs) you receive the collateral back. As a borrower, you would have avoided sell pressure on the token gained access to $$
It is no small thing that any token that has a chainlink feed can be used as collateral on our platform. This is a huge step away from the gate-keeping currently happening on many other lending platforms.
The Utility that is lending is something we feel every token out there (on Ethereum, but soon we will be on FTM and Polygon too) should be able to provide to their community. You can compare it to what Uniswap did 3 years ago when it did away with listing fees for trading a token. similarly, we are removing roadblocks (high listing fees) to bringing lending to as many projects as we can.
Question (Vanina [AdEx]): Can users use LPs as collateral for loans?
Question (Georgi | AdEx Network): or staked tokens
Answer (Shai): Currently, all tokens available on Yield have Chainlink Price Feeds for security. If any LPs have such a feed, they would certainly be eligible for consideration. At this time, however, we don’t have any LP tokens supported.
Question (Vanina [AdEx]): I am guessing the same goes for NFTs?
Answer (Shai): Correct, however, the problem with NFTs is much more difficult since they are unique. You would need a way to gauge their value at any given time
For example, setting aside the lack of price feed, a user could purchase their NFT for 10 ETH using another account, post it as collateral to borrow 5 ETH, and then run away with 5 ETH and leave the lender with a potentially worthless NFT
However, if the NFT was something like a Uniswap v3 LP, that is something that could potentially be done just like any LP, although still much more complicated than a Uniswap v2 LP
Question (Georgi | AdEx Network): Why did you decide to list ADX on Yield? What do you like about AdEx Network?
Answer (TOB): Interestingly, I came into crypto around the time Adex was launched. I remember that time q4 2017 or thereabouts quite well. 2017 crypto market was full of great ideas but we just had a poor funding model (in terms of ICOs) which led to many projects gambling with funds and ultimately getting hit hard by the bear market. so for 1, I like to see projects that have weathered that storm and are still standing — it says ALOT.
Separate from this, I think compared to 2017 we are seeing fewer great ideas in crypto and a whole lot more copying. Sure Finance is a great industry to showcase what blockchain has to offer but I do like to see and know that there are other use cases — enter Adex.
In addition, I also believe that the privacy and fraud-ridden advertising world needs solutions like Adex
It was an easy choice. But just to make it clear to your community we simply asked. In the end, Yield is not looking to become a very prominent/visible organization. There is no organization behind us. We are a community-driven project and all we strive for is to have a platform that others can use. So Adex community you can thank your fearless leaders for this development that is adding Lending to the healthy list of utility the Adex token offers
Question (Georgi | AdEx Network): Many thanks for these wonderful words and for the choice you have made with us! We are on the verge of launching our Wallet soon and this partnership between us will be a great bridge for future initiatives. Thank you also for believing in what we do, that matters!
Let’s move on to the final question that we have here and that’s basically something we all want to know:
What else can we look forward to in the roadmap for Yield Credit?
Answer (TOB): A lot is coming. I cant share precise details but the V2 variant of our platform will see a shift into a pooling feature. Rather than the manual setup we have now, we will introduce pooling like many others. However, our DNA will not be lost. Returns on loans will be determined by lenders and borrowers (NOT the platform), interest rates will be fixed, and borrowers that repay loans will be incentivized.
This is a significant undertaking. A complete restructure of how our smart contracts work is needed, as well as the mechanics behind the flow of value on the platform. We are very excited to show the community what we have been up to. They will not be disappointed.
Expansion into FTM and Polygon can be expected too.