Community Built FAQ
17/10/2021 - this is a work in progress. Please be patient.
A: It’s a unique system (aka “application” “protocol” “smart contract”) where you can borrow a stable coin (USDL) using your Pulse as collateral.
A: Liquid Loans
A: LOAN is the native token of Liquid Loans protocol. The system generates LOAN tokens for incentivizing early adopters which captures the fee revenue generated by the system and distributes it to the stakes of LOAN tokens.
When staked, it earns USDL revenue from borrowers issued stablecoins and earns PLs for redemptions of USDL for PLS. It’s also a speculative instrument that can go up and down in value.
A: This is not a fork of Aave. Aave uses flash loans, and this protocol does not.
A: It is expected to be ready to launch in production along with the official PulseChain Launch but may hold off for some time to ensure we launch in a stable environment.
A: Your loan must be a minimum of 110% collateralized. That means: If you have $10,000 worth of PLS, you can borrow 10,000/1.10 = 9090.90 USDL or ~90.9% of the PLS value.
A: Yes, the minimum loan amount is $2000 USDL. No maximum.
A: Yes, you may remove PLS up to a collateralization ratio of 110%. You may remove any amount of PLS but must remain above 110% collateralization. If you would like to remove all PLS, repayment of the loan in USDL must be made.
A: Not exactly. You’re using your loan as your stop loss. I.e., you borrow against your PLS; if the value drops sufficiently, you lose your PLS, but you keep your USDL. So it’s effectively a stop loss. The stability pool is a mechanism, separate from your loan, that helps ensure USDL remains pegged to $1.
A: I suppose you wouldn’t, but psychologically some people don’t like to have debt. Some people may just want their PLS back to give as a gift…
A: Yes, in fact, you can use the same Dapp where you created your loan to monitor your loan.
A: Just guessing at the timeframe of your “flash loan,” but I suppose you could program a bot to interact directly with the Liquid Loans Contract, but the system is designed to be accessed by a human through the User Interface.
A: This has been explored but will not be at this time. There is more economic study required to determine if it would benefit the community as a whole.
A: Similar to the answer above, for HEX. It’s something that's been explored and not out of the question, but the focus is on the launch of the first product.
A: USDL
A: The USDL depositors can withdraw their USDL at any point, with one exception: If there is a loan that is under collateralized and needs to be liquidated, the loan must be liquidated first (i.e., someone must run a function to liquidate the Vault). This is a good thing. In essence, it forces the USDL Stability Pool depositor to make money from the liquidation prior to removing their USDL. This is to ensure the system stays in a healthy state.
A: You receive PLS and earn LOAN tokens
The protocol continuously issues LOAN to users who have deposited USDL to the Stability Pool. The system issues LOAN according to a release schedule. The release schedule halves the number of tokens distributed each year, favoring early adopters.
A: Yes, its native token is the “LOAN” token.
A: In several ways:
A: Within the Liquid Loans system, you stake LOAN tokens and receive USDL and PLS as borrowers take out loans and redemptions occur.
A: It’s designed to be staked and earn revenues from the protocol. It’s a utility token with utility, so it should go up in value the more successful the LL protocol becomes.
A: Yes and most likely web3 as well.
A: You can farm in multiple ways:
A: How is this trustless? Not your keys, not your coins. It’s just you and the smart contract. You deposit PLS and mint USDL. You pay off your loan and receive your PLS.