Minterest is a lending protocol created to service the billions in TVL, DeFi lending projects, to benefit users.
The General Manager of Altcoin Buzz, Anindya (Ani) Baidya, anchored the Minterest AMA session on our Telegram channel with Josh Rogers, the CEO, and Kyn Chaturvedi, the COO of Minterest.
Below is a recap of the AMA session with Josh Rogers and Kyn Chaturvedi to understand what the platform is about. Notably, the AMA is in three segments: introduction, deep dive, and community questions and answers.
Segment 1: Introduction to Minterest
Background Information
Q – To start with, tell us about your company. How was the concept of Minterest created?
Kyn: Minterest is a lending protocol being built on Moonbeam, within the Polkadot ecosystem. Minterest was built to compete with other major platforms like the Aave and Compound.
Let me give a little more background on what’s happening in the space and as to why lending protocols matter. Roughly 90% of crypto assets are sitting idle in wallets. Minterest allows these assets to be put to work through the basic foundations of banking, which are lending and borrowing.
Josh: What Minterest does is capture all the fees from its activity. This includes liquidation fees because the protocol has an auto-liquidation process which means it manages borrower solvency and not third-party whales.
Kyn: Traditionally about 40% of the value on lending protocols is lost due to liquidations by third parties. As Josh mentioned Minterest is its liquidator and can capture this value as a result.
Josh: Including liquidation fees, it means Minterest’s fee income is more substantial than peers like Compound and Aave.
Then, Minterest auto spends this fee income on its own MNT token and rewards its users with them. That does something unique that other protocols don’t do. It increases the token price which increases the value of emissions it provides to lenders and borrowers.
When you increase the value of emissions to lenders and borrowers you increase their APY or their total annual yield and, in return, they attract more users who lend to the protocol to access these higher yields. In a snapshot, Minterest’s model means it provides users with the highest long-term yields in DeFi.
Q – As you are gathering fees from all activities in the platform (+ liquidation fee) are these fees comparable to the ones like Compound or AAVE or higher/ lower?
Josh: The fees that Minterest charges are comparable to Aave and Compound. But, the way it captures these fees means that there are no profits or liquidation fees extracted from the protocol for the benefit of a few. The protocol captures 100% of its fee income and does so for the benefit of its community.
Segment 2: Deep Dive
More information About Minterest
Q – So in simple terms, if I have 10k USD, I will put it in Minterest and earn APY (higher) and will also be able to take a loan from the platform.
Josh: Yes, it enables you to work your assets while you hold them.
Q – What are the main tokens currently supported (and how many)?
Josh: The protocol will launch with fundamental tokens required in lending protocols – wBTC, ETH, DAI, USDC, USDT but will likely include Polkadot tokens like DOT and GLMR.
After launch, this portfolio will likely build-out, which is subject to the DAO, but the key to any token being on Minterest is it having deep liquidity.
Q – With the bear market, everybody is interested in passive income with stablecoins. What APR will you start with for stablecoins, or is it algorithmically decided?
Kyn: Everything is algorithmically determined on Minterest. It’s based on supply and demand. That said, due to Minterest’s buyback engine, it can provide returns to its users with greater effect even during a market downturn. And during the protocol’s launch, we will be bootstrapping the Buyback with additional MNT emissions, to incentivize users to lock their MNT tokens in and enjoy the added rewards.
Additionally, Minterest’s tokenomics are quite attractive. Tokens are released block by block, not in tranches. As a result, we won’t see tokens flooding the market all at once.
Altogether, we’re developing a protocol to be as resistant to bear markets as possible. So those who are participating in our current public offering, via our Community Event or through the upcoming LBP on February 8-11, will be able to earn significant returns when Minterest launches at the end of Q1 2022 since they’ll have the lion’s share of tokens in the market to stake and earn.
Q – Let’s talk a bit about the Community Event now. Whitelisting ends in 18 hours. Tell us more about how our community can participate.
Kyn: Of course. Minterest is conducting its public offering via an LBP on February 8-11 as I mentioned above. It’s the first time that MNT tokens will be accessible outside of our institutional raise.
What we realized, though, is that though the LBP is an incredibly fair approach to a public offering, because it operates a reverse auction, price discovery is part of the process.
However, LBPs are not conducive to the smaller retail user. There are two issues: (1) Ethereum gas fees are incredibly high (2) It can be difficult for users to know when to purchase tokens in an LBP due to the changing nature of the price curve.
So what we did was design a Community Allocation Event to enable our community to be able to participate without the downsides mentioned here. The way it works is we are essentially pooling together deposits of the community and then purchasing tokens in the LBP for them. The price they receive will also be attractive as it will be the lowest average price in the LBP. They won’t have to worry about gas prices nor if they got a good deal, because that’s what we want to ensure.
The amount of the deposit for every community member is up to $500 USDC and the whitelisting process is currently open to anyone that wishes to participate until January 29th (tomorrow). Simply go to Minterest.com and you’ll see the option to Whitelist at the top of the page.
Q – Will the token price of the Community Event be lower than the floor price of the auction/copper?
Josh: The price in the Community Event will be the lowest average price, so this will be above the floor price, but we imagine not in any significant way.
The reason for the average lowest price is simply to ensure the LBP cannot be open to an economic exploit which would undermine the intention of what we are seeking to achieve for Minterest’s smaller community investors.
It’s about ensuring people in the Community Event are left with confidence they got a great price for their tokens, and likely much better than they might have achieved by participating in the LBP on their own.
Ani: Great to hear! Community, in case you are wondering where to whitelist. Here’s the link.
Q – Coming back to your product, what is the LTV? Let’s take my example. I deposit 10k, how much can I borrow? And at what % does it liquidate?
Kyn: Sure Ani, so the LTV depends on the token that is being used as collateral. Stables allow you to borrow higher amounts, so for your $10K, you’ll be able to get around $7-8K of any other token you’d want as an example. They’re comparable to what you’d find on the other majors in the space
As for liquidations they’re also comparable. The difference is that since Minterest handles the liquidations and not third parties, the protocol is far less predatory and is not seeking economic returns. As a result, it chooses to take small tranches of liquidations at a time instead of gobbling everything up.
Segment 3: Community Questions and Answers
For this segment, the five best questions shared five NFTs. Some of these questions are listed below:
Q.Twitter – 5 million MNT tokens allocated for LBP + Community Allocation Event. Can you explain what the proportion is? How many tokens for LBP and how many tokens for CAE?
Kyn: Yep sure, I can understand how this could be confusing. The core answer:
- all 5M MNT are allocated for the LBP
- There are no tokens reserved for the CAE.
How does this work?
The LBP is the public offering instrument for Minterest. So the way to think about the CAE is that Minterest is pooling the community’s funds together to purchase MNT tokens in the LBP.
Again covering why we’re doing this. The CAE ensures that our retail community gets access to the public offering via the LBP and:
- receives value for their deposit since they get the lowest average price in the LBP
- can avoid crazy ETH gas fees to participate in the LBP
Q – As a multi-chain-enabled lending protocol, will you use NFTs as collateral. How will NFTs be collateral in loans? What kind of NFT items is acceptable as lending collateral?
Josh: Cool question Ani. Unfortunately, no, Minterest NFTs won’t qualify as collateral.
Minterest’s token markets operate via a modern pricing oracle with deep liquidity which can be bought and sold in seconds.
While we believe Minterest’s NFTs will have a very strong interest there is only a limited number however and this doesn’t fit such requirements. Also, the last thing we’d ever want to see is the protocol liquidate a user’s NFT due to an uncollateralized position.
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