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The latter; the lender doesn't get to enjoy the appreciation of the underlying collateral. The underlying collateral is simply meant to de-risk an anonymous loa
by bhupy 6y ago
The latter; the lender doesn't get to enjoy the appreciation of the underlying collateral. The underlying collateral is simply meant to de-risk an anonymous loan with 0 credit check.
- graeme 6y agoHow does the sale work. My impression is smart contracts execute automatically. But if I have say apple stock to sell the market price differs moment by moment. An exchange would be specified, and trade type, and the whole collateral sold then proceeds divided?
- bhupy 6y agoI haven't read the full contract yet, but I think it just automatically converts the collateral to the right amount of the coin that's being lent. If you open the markets, you'll see that you earn the highest APY by lending USD-pegged stablecoins like DAI, USDT, etc: https://compound.finance/markets https://compound.finance/markets It's possible to use Uniswap (or some other decentralized exchange) to convert X amount of ETH to Y amount of DAI. The smart contract has access to Uniswap as well as knowledge of Y. Honestly, if you have like $100 to play with, I recommend messing around with it on your own. My $50 loan that cost me $80 was effectively $130 of personal hands-on R&D. If you already invested a little bit into BTC/ETH over the last few years, you might also have "house money" to play with.