Don-key Loan and Leverage Pilot Is Live!
Today, Don-key is thrilled to reveal the launch of its highly anticipated loan and leverage copy-farming layer!
It will allow the community to borrow loans against their collateralized farming deposits, freeing up funds that would ordinarily be subject to the opportunity costs of being limited to one copy-farm strategy. Now, based on tiers, users can borrow a percent of their deposits and invest it in other strategies or even take the borrowed funds elsewhere outside the platform.
Protecting the community, Don-key’s loans will be liquidation free, because loans will be measured in the value of the underlying base token of each farm’s LP which is being used as collateral. In other words — you collateralize a BUSD strategy to borrow BUSD.
While loans and leverage will soon be permanent and highly accessible, the test pilot will be limited in scope to just 1 million dollars in BUSD, distributing 250 thousand dollars evenly across four auctions, each of them running for 72 hours making the total duration 12 days. Investors can participate just once in each auction and a total of 4 times during the pilot. At the end of this period, loans will be extended to Cake strategies as well.
Being that loan funds are limited, especially within the pilot, community members will bid on 30 day loans in a closed (private) auction by staking their deposit and offering the highest flat fee (non-compounding) commission rate. This short term loan will thereby go to the investors who most value short term opportunities the most. If two investors bid the same commission (in percentage from requested borrow amount), then the loan will go to whoever requested to borrow more funds. If two investors bid the same commission and request the same amount, then the loan will go to whoever made the bid first (time stamp).
In some situations, secondary winners will experience a “Partial win” and will only win a part of their requested loan due to competition with higher bids. In this case the investor will be able to release excess funds immediately, with no extra cost.
Anytime after winning, until 30 days after, the winner can claim their initial collateralized copy-farm deposit by repaying the loan plus whatever commission they bid at. After these 30 days, investors will be subject to a one time 10% penalty if they fail to pay off the loan.
Important to note, DON accelerated rewards will continue to accumulate for base deposits, but not for funds borrowed and reinvested.
While loans and leverage will soon be accessible to all tiers, the pilot will be first rolled out to tier 5, with users able to borrow 70% of their deposits, tier 4, with users able to borrow 50% of their deposit, and tier 3, with users being able to borrow 30% of their deposit (LTV).
Today’s brand new loan and leverage layer represents Don-key’s first steps towards a significantly more sophisticated DeFi protocol. The function itself will see many improvements and iterations as the team workshops it in union with the community’s feedback. We are excited to roll it out and to share it with you, Don-key’s immensely loyal community.
About Don-key Finance
Don-key.finance is building the first social trading platform for yield farming, bringing together liquidity providers and yield farmers alike. For this reason, the community refers to Don-key as the eToro of Yield Farming, which is a title the team embraces wholeheartedly.
The goal of the platform is to eliminate yield farming’s infamous complexity and replace it with a seamless retail experience, streamlined to offer the most profitable and adaptive product on the market.
With just one-click users can route their liquidity — in whichever token they chose — through professionally designed strategies that are updated to chase the highest available APY while minimizing risk.
Competitive Yield Farming is a full-time job; Don-key does it, so you don’t have to.