The importance of stablecoins in the crypto community can not be overemphasised; it currently has a market capitalization of about 130 billion and a trading volume of about 22 billion.
USDT, USDC, and BUSD dominate the stablecoin market in terms of the number of tokens locked across DeFi. The USDT and USDC have about 82 billion and 29 billion market caps, respectively.
The stablecoin was meant to be the heaven for crypto assets, but that has yet to be the case from the experience of stables de-pegging from the USD dollar.
The USDT algorithmic stablecoin made a show that would not be forgotten quickly; the most recent was USDC, a fiat-backed stablecoin. This is to prove that no Stablecoin is entirely safe.
Other crypto assets, including stablecoins too, back some other stablecoins. Such as, the USDC de-peg event had varying degrees of impact on different stablecoins. Some exhibited greater resilience during periods of de-pegging, while others, such as DAI and FRAX, closely mimicked USDC.
TABLE OF CONTENTS
STABILITY AND YIELDS ON STURDY FINANCE
Like every typical Defi 2.0 lending and borrowing platform, lenders deposit stablecoins or Ether to provide funds for borrowers. Borrowers then use these funds to invest in approved farming protocols like Yearn, Convex, Lido and Balancer. Rewards generated from farming are divided between lenders and borrowers.
In traditional lending protocols, lenders earn interest from the payments made by borrowers. To increase their earnings, lenders must raise interest rates.
However, Sturdy has a different model. Instead of relying solely on borrower interest payments, Sturdy allows lenders to earn yield by farming profits generated by borrowers’ assets.
This model has helped Sturdy to keep zero Interest loans for borrowers and high-leading yield lenders.
The yields generated will be split among lenders and borrowers, unlike other platforms like Curve where borrowers are expected to pay interest on their borrowed assets.
GOVERNANCE IN STURDY FINANCE (STDY)
STDY is the governance token for Sturdy Finance and has a total supply of 100,000,000.
It is not yet in circulation at the time of writing, but STDY can be generated by lending stables or ether to the protocol.
STDY is earned in addition to the stable rewards earned.
LENDING AND BORROWING IN STURDY FINANCE
Lending In Sturdy Finance
When lending, there are key factors you should pay attention to as soon as you select your perfect stable coin to lend.
The Utilization Rate
This signifies how much of the given asset is being borrowed from the pool.
If the utilization rate goes above 80%, the deposit APY and the borrow APY will increase. This is done to incentivise deposits and balance the pool.
To get a Zero APY on borrowed assets, you would have to stick to pools with a Utilization rate of less than 80%
SturdyFi: Lending; Depositing stable asset
Deposit APY
This is the current annual percentage yield (APY) you will receive if you deposit this asset.
The yields are paid out in kind and distributed roughly every 24 hours.
Average APY
This is the average APY for the past 30 days.
For a detailed step-by-step guide on how to lend and withdraw, visit: Sturdy Documentation
BORROWING IN STURDY FINANCE
When borrowing, there are key factors you should pay attention to. The following are those factors:
Health factor
This refers to the health of the deposited asset. Your health factor determines how close you are to being liquidated. You can deposit more assets or repay your borrowed positions to increase your health factor and avoid liquidation.
Deposit APY
This is the current annual percentage yield (APY) you will receive if you deposit this asset.
The yields are distributed every 24-48 hours.
SturdyFi: Borrowing; Depositing collateral
Liquidation threshold
This means that there is a certain point where a borrower’s position will be seen as not having enough collateral and may be sold off to repay the loan.
For instance, if the liquidation threshold for collateral is set at 80%, it indicates that the loan will be sold if the amount owed reaches 80% of the value of the collateral.
Liquidation penalty
When a liquidation happens, the people responsible for it, called liquidators, pay off a portion or the entire remaining borrowed amount on behalf of the borrower.
As a result, they can purchase the collateral at a reduced price and keep the remaining money as an extra reward or bonus.
SturdyFi: Borrowing; Borrowing stables
Liquidations
The same principle in other protocols plays out here when a borrower’s health factor goes below 1 due to their collateral value not correctly covering their loan/debt value.
This can occur when the collateral decreases in value and the borrowed asset increases in value.
For a detailed step-by-step guide on how to borrow and repay, visit: Sturdy Documentation
Leveraging Deposited Assets On Sturdy Finance
It is actually interesting to see that sturdy finance has a one-click button to leverage deposited assets as much as two (2) to (9) times.
We have key factors like Max Leverage and Max Apy elaborating the opportunity with the chosen asset.
Max. Leverage
This is the maximum leverage you can opt for on this asset.
Max. APY
This is the maximum APY you can receive if you opt for the maximum leverage on this asset.
For a detailed step-by-step guide on how to Leverage and Deleverage, visit: Sturdy Documentation
CONCLUSION
The demand for stablecoins is expected to grow as they provide stability and bridge traditional financial systems and the decentralised world of cryptocurrencies.
Stablecoins will likely continue to evolve and improve over time. As the cryptocurrency industry matures and technological advancements are made, we can expect to see new and improved stablecoin options emerge.
Sturdy Finance provides an innovative approach to on-chain stability and yield generation, offering opportunities for lenders and borrowers in the DeFi ecosystem.
Users can earn rewards by lending assets and participating in borrowing with certain considerations to minimise liquidation risks.