Borrow with Collateral
Borrowing IOU Tokens with Collateral:
Scenario: Alice wants to leverage her GM holdings on the Xloop platform. Whether she plans to earn passive income or tap into the broader cryptocurrency market, her initial steps remain consistent.
Steps:
Collateral Deposit:
User Action: Alice deposits 10,000 GM tokens for ETH-USDC pool, which is worth $16,000 at the time of writing this doc.
Outcome: Her deposit serves as security for the IOU tokens she will borrow, ensuring there's value backing her IOU tokens.
Borrowing IOU Tokens:
User Action: With her GM tokens securely deposited, Alice borrows 8,000 IOU tokens.
Outcome: Alice now has 8,000 IOU tokens at roughly 200% collateral ratio she can use in various activities on the Xloop platform.
Action 1: Staking IOU Tokens in the Stability Pool
Purpose: For users who wish to earn passive income and help provide stability to the platform.
User Action: Alice stakes the 8,000 IOU tokens in the StabilityPool.
Outcome: Alice is positioned to earn passive income through liquidation rewards, and her staked IOU tokens contribute to platform stability.
Action 2: Minting XDC Tokens using IOU Collateral
Purpose: For users who want to tap into the broader cryptocurrency market by leveraging their IOU tokens to mint stablecoins.
User Action: Alice mints 8,247.4 XDC tokens using her 8,000 IOU tokens as collateral. She also burns XLOOP tokens to facilitate this minting contributing the other $247.4 value in the minted XDC tokens.
Outcome: Alice is now armed with XDC tokens that she can trade or swap for other cryptocurrencies. If she desires, she can also swap her XDC for popular stablecoins like USDC, expanding her reach in the crypto ecosystem.
These two actions present distinct pathways for Alice after borrowing IOU tokens. Each serves a different financial purpose, and the best choice depends on Alice's goals and the market's conditions.
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