I need to borrow, looking for tips

General Discussion Binance Smart Chain
1

Hi everyone,

I’m about to borrow in venus protocol and I need clarifications about few things. If any of you can help me out with your experience, I would be really glad.

I’m going to supply ADA as collateral, I want to get the loan in BUSD.

  1. What will happen if the borrow APY for BUSD gets changed after I borrowed?

  2. Why do we have different APYs for loaning stable coins? as they are all stable I can’t understand why a person would go for the higher APY stable coin because they can always loan BUSD (-7.53 APY) for example and convert it into USDT if they need to, which if you took the USDT as a loan directly, it’ll cost you -13.36APY at the time I’m writing.

  3. What will happen if I wanted to repay early in full, do I still need to pay the entire APY for the year?

  4. I understand that if my collateral value drops which mean, ADA drops in a significant amount, there is a risk I can be liquidated (but also I know if I add more collateral I can stop the liquidation), besides that, are there any other risks that can liquidate my collateral?

So those are pretty much all I need answers to.

Thanks,
Scoopa

2
  1. you have to pay more interest
  2. Supply and demand
  3. no
  4. not that I know of
1 Like
3

Hey, thanks for your reply. I really appreciate it.

Well, that’s unfortunate. Even if it is 100% APY while I’m in the loan I would need to pay it then. :face_with_thermometer:

So does the interest will be calculated monthly or daily? do you have any idea about that?

4
  1. that would be the case, even though I don’t think that the jump rate model goes up to 100% (not shure about that). Highest I have seen was on Cake recently 75%.

Its all a question of supply and demand really… In your scenario if it would really go up to 100% the interest rate for the people supplying BUSD would skyrocket, too. So this would cause more people to deposit theri BUSD at venus (to profit from the high rates when supplying) and would (of course) cause a significant number of borrowers to pay back their loan, which would cause the 100% interest rate to go down.

I think the interest is calculated every new block of the BSC blockchain (roughly every 5 seconds?!)

1 Like
5

That makes sense, thank you very much!