Doki lending with low APR, No-liquidation on KittenFinance
On KittenFinance, you can now deposit DOKI as collateral to borrow ETH on L1 and Matic on L2. You can also opt to be a lender and earn interest on your idle ETH or Matic, if there are borrowers.
In Kitten’s unique lending solution, there are no liquidations, only defaults. We have setup a lending vault and supplied it with 30 ETH from the buyback account with the following parameters:
- Borrow price 0.035 ETH. This means that for every 1 DOKI you deposit into the pool, you can borrow up to 0.035 ETH. Currently, this is over 72% of your DOKI collateral value.
- Expiry 31 days (28 days remaining as of writing this post). In order for borrowers to get their DOKI back, they need to repay the borrowed ETH + interest before the expiry date.
- APY (Interest rate) of 12% (Just 1% monthly). If you borrowed 1 ETH for 30 days, you just need to return 1.01 ETH to the vault (Only 0.03% everyday and you can payback the ETH anytime)
Let’s take a look at an example scenario to understand how it works:
There is another promising project and you want to ape in using ETH for short-term profits. At the same time, you don’t want to sell your position in DOKI. Realizing that Kitten lending is a great solution to this dilemma, you deposit 100 DOKI into the lending vault and borrow 3.5 ETH.
A few things can happen afterwards:
1/ You profited from the new investment. DOKI is trading at or above 0.035 ETH per DOKI. You decide to payback the 3.5 ETH + interest, and you get your 100 DOKIs back.
2/ The new project rugged and you lost your borrowed ETH. Unfortunately in this case, you will still have to payback 3.5 ETH + interest before the expiry date, otherwise it counts as a default and the lender will get your cheap DOKIs.
3/ The price of DOKI falls below 0.035 ETH per DOKI. You decide not to pay back the loan because what you borrowed is now worth more than your collateral.
4/ The price of DOKI is above 0.035 ETH, but you forget to payback your loan before the expiry date. Don’t do this. It will count as a default and the lender will get your cheap DOKIs.
- You can also deposit idle ETH and potentially earn up to 12% APY. As a lender, you bear the risk of DOKI falling below the borrow price of 0.035 ETH per DOKI. It is similar to setting a limit order for DOKI at 0.035 ETH while making the ETH available for others to borrow.
- Lenders can withdraw ETH at anytime as long as there is free ETH remaining in the vault.
- As a lender, when you deposit ETH you are swapping ETH for vaultShares
and vaultShares appreciate over time (if there are borrowers). When you withdraw ETH, you are swapping vaultShares for ETH.
- The interest accrues in real-time. So if you borrow and payback your loan in a day, you only have to pay 1 day worth of interest (0.03%).
- You can partially repay loans to unlock and withdraw partial collateral in DOKI.
- Kitten lending is also gas-optimized and permissionless, feel free to experiment by creating your own lending vault with custom parameters for expiry price, date, and interest rate.
Step by Step Tutorial
1/ Access: https://www.kitten.finance/new/ and connect your wallet. Select Lending from the top menu and change to the desired network ETH or Matic.
2/ Select vault of choice from the list
3/ To borrow ETH, lock DOKI. To lend ETH, lock ETH. Read the text prompt for more information and details. Remember to pay back your loan before the expiry date and time! (If you want to get your DOKIs back)
KittenFinance is building new and innovative products to advance the DeFi space. We hope that this is the start of a great long-term collaboration with them. Stay tuned for more as we explore more synergies between our products!