For weeks I have been diving into borrowing and lending protocols and one that stands out on Terra chain is Edge protocol. The platform is still in beta phase but supply and borrow side is full of options and with a TVL of over $50 million you can bet that there are opportunities to profit whether in a down or up market.
Hedge Against Price Drop?
One of the easiest way to hedge against a token price drop is to supply the token on Edge protocol and then borrow against it. Borrow the same token up to a certain percentage you feel safe from liquidation, under 70%. Then sell the borrowed assets for UST and hold the UST awaiting for potential price drop in asset. In turn after the asset has dropped in price you can buy back in and collect the difference. This will mitigate the draw down in your crypto holding.
Lending and Borrowing % yield
Another option on Edge protocol to earn a yield is to supply an asset that has a high APY. For instance currently supplying bLuna will yield over 5%.
Then use the supplied bLuna as collateral and borrow Luna against it where Luna borrow rate is 5%.
Pocket the different in supply apy over borrow apy and still have liquidity to invest in with the borrowed asset. A double win.
Conclusions
Edge offers 9 different assets to supply and borrow. With multiple yield bearing assets such as LunaX, aUST, and stLuna. It has enough of a range of options and yields for users to take advantage of using. Easy to use and the transactions are immediate I recommend using Edge for those who are trying to borrow and lend on Terra chain.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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