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You say that one can create leverage by borrowing? How does that work? Is it a contract like "You borrow me 1 ETH and I will pay back 1.1 ETH in a year. Except
by ArtTimeInvestor 6y ago
You say that one can create leverage by borrowing? How does that work?
Is it a contract like "You borrow me 1 ETH and I will pay back 1.1 ETH in a year. Except when X happens, then I will pay back 2 ETH"?
If so, what is X?
- runeks 6y agoThe leverage is speculation using borrowed money. See: https://www.blueleaf.com/articles/how-leverage-works-in-investments/ https://www.blueleaf.com/articles/how-leverage-works-in-inve....
- ArtTimeInvestor 6y agoThat does not answer my question: How a smart contract can implement lending in a way that both parties are satisfied: - The lender gets their money back plus interest. - The borrower makes a profit if the price of the borrowed currency goes up.
- cryptonautics 6y agoMajority of the lending platforms to date are centralized and custodial solutions
- dharma1 6y agoCheck out Aave or Compound. You basically use your crypto as collateral, and do whatever you want with the borrowed money. If you want to take the borrowed money and get even more (leveraged) exposure to crypto, you can. You don’t pay back more than the borrowed capital plus interest. https://docs.aave.com/faq/borrowing https://docs.aave.com/faq/borrowing