WanLend, the Defi app in the Wanchain ecosystem, presents some great opportunities for DeFi investors. Because Wanchain is looking to grow, some of their pricing is aggressive against other DeFi platforms.
And that creates opportunities for us. We are going to explore 2 stablecoins and one leading coin today. So we are going to look at WanLend for deals on:
- USDT and USDC as the most popular stablecoins
- and ETH
Thanks to Wanchain’s bridge Wanbridge, assets held in the Ethereum or Moon River chains can bridge over to Wanchain easily. Here is a great primer on using the bridge with both Metamask and the equal wallet in this ecosystem, Wanmask.
Let’s look at the stablecoins.
Example #1: Stablecoins-Tether USDT and USD Coin USDC
If you look at Tether’s public wallet, you would see that 98% of all Tether is on either the ETH or Tron blockchains. Ethereum is still the largest chain for USDT but not by much. More than $37 billion in USDT sits on Ethereum and some of that can be used more effectively if we move it over to WanLend.
Our LTV and Interest Rates to Borrow Stablecoins
The first test is to see how much USDT we can borrow. Our loan to value on various platforms for USDT, thanks to DeFiRate is:
- Binance 65%
- Celsius 50%
- Aave up to 75%
- Nexo 50%
- YouHodler 50%
- Curve 50%
While some let you borrow more than 50%, that’s a good round number for what we are looking for with an average interest rate of 7.5%. Most payments on these platforms are interest-only. So if we borrow $10,000 @ 7.5%, we are paying $62.50 per month on that.
Now let’s look at WanLend’s rates.
Today, we can earn a rate of 12.14% on wanUSDT. USDC is even better at 17.4%. Let’s see how much income that earns us.
And remember, as we’ve mentioned in other articles here about Wanchain, the bridge between chains is a decentralized smart contract system that uses a Vault. That Vault creates USDT or USDC at a 1:1 ratio of the amount you deposit. The compatibility factor is literally the only difference between Tether on the Tron chain and USDC on Hedera vs wanUSDT and wanUSDC.
This decentralization is very important here. It eliminates the counterparty risk of a custodian who wraps the coin, as you have for Wrapped ETH.
It does not take a genius to see that if you borrow at 7.5% and earn 12.14 or 17.4% then you are making money on your borrowed money. The only real downside is having to lock up your initial USDT or USDC for the loan. You lose that flexibility but you gain some extra income from your stablecoins.
- At 12.14% on USDT, you earn $101 per month
- At 17.4% on USDC, you earn $145 per month
ROI on Our Stablecoins
A little quick math here and we see on USDT we earn ($101-$62.50) or $38.50. That doesn’t sound like much on $10,000. In fact, it’s only 0.00385%. But that’s for one month. Annually, we are earning 4.62% with little risk on crypto that is just sitting around.
For USDC, we earn ($145-$62.50) or $82.50. That’s a 0.00825% return. Again, annually that’s 9.9% so we are doing pretty well here.
And here’s the even better part. If you see a great investment opportunity that you want to buy with your USDT (or USDC), like Wanchain for example (haha), then you can:
- Remove your supply
- Bridge it back to ETH
- Repay your loan
- and buy your USDT trading pair easily and quickly.
Example #2: Ethereum
Right now, you can borrow ETH on AAVE for 0.12%. With ETH’s current price at $4300, let’s say you want to keep 4 ETH for safekeeping for that NFT you want to buy or just in case you see a great ERC-20 token you want.
At 0.12% interest-only, our payments will be ~$2 per month. Yeah, seriously. That’s the power of interest-only borrowing at low-interest rates. Using the bridge to convert our ETH into wanETH, we see we can earn 3.51% by lending it on Wanchain.
At 3.51%, we earn $50.31 per month. Again, on our principal, this is a small amount.
BUT, and this is a big but, we are earning in ETH. This is a major advantage of this technique. We are earning ETH while we wait for our next opportunity to invest in something.
This kind of passive investment in a quality asset is just what we are looking for.
So let’s review what we have.
- Passive income lets you earn on your quality crypto assets while you wait for a chance to use them for investment or other purposes
- Small amounts really compound over time in these investments
- Your earned money more than pays back your borrowed money while reducing the risk of liquidation of your principal
- Wanchain’s bridge and vault system is decentralized, meaning no counterparty risk to wrapping your coins
- And you can unwind, fast, easy, and cheap anytime to pounce on that new investment opportunity
It’s time to give WanLend a look and see if the platform has a place in your investment portfolio.
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