Lenders
Unlike peer-to-peer loans marketplaces, Unlockd operates with a much more efficient system of pooled liquidity.
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Unlockd V2
Unlike peer-to-peer loans marketplaces, Unlockd operates with a much more efficient system of pooled liquidity.
Last updated
Unlockd's liquidity pools are smart contracts responsible for locking tokens, USDC for instance, to ensure the liquidity of those tokens to be borrowed by users when they take out a loan.
Unlockd stands apart from conventional lending platforms with its liquidity pools. These smart contracts, specifically for USDC, lock in assets to ensure consistent liquidity for borrower loans. This model enhances efficiency, offering a dynamic lending and borrowing environment.
As a lender on Unlockd, your contributions provide vital liquidity, enabling efficient lending processes and earning potential, all within a framework of robust risk mitigation.
As a lender, you can deposit your assets into these pools and in return, receive uTokens, representing your share in the pool. This process offers flexibility:
No Deposit Limits: You can deposit any amount, with no minimum or maximum limits.
Transaction Cost Consideration: For smaller amounts, it’s important to consider that the transaction cost might outweigh the expected earnings. This is crucial for optimizing your investment strategy.
Dynamic APY: The yield on uTokens varies with market conditions. Each asset has its own supply and demand dynamics, influencing its Annual Percentage Yield (APY).
Continuous Earnings: Your earnings are a share of the interest accrued by borrowers when they repay their loans. Future plans may include additional earnings through UNLK token rewards.
Unlockd's lending pools are designed to maximize your earnings and optimize the taxation derived from your profits by providing liquidity. When you deposit your assets and receive yield, it is automatically reinvested in the pool to compound and grow your return exponentially.
Unlockd's auto-compounding feature offers tax efficiency for lenders. Your earnings are reinvested automatically, delaying capital gains taxes until you withdraw, making Unlockd an effective choice for tax-smart yield generation.
uToken Redemption: Withdraw your liquidity by returning the uTokens received during your deposit. These tokens are burned, and your assets are returned.
Liquidity Availability: Withdrawals depend on the available liquidity in the pool. If the pool’s resources are tied up in loans, you may need to wait for liquidity to free up from either additional lender contributions or borrower repayments.
The primary risk for lenders is the potential default of borrowers and market volatility affecting the value of liquidated collateral. Unlockd mitigates these risks through:
Multi-Asset Collateral: This feature allows borrowers to use multiple RWAs as collateral, diversifying risk.
Diluted Impact: The pooled liquidity model spreads risk across numerous participants, reducing the impact of individual defaults.
Dynamic LTV Models: These models are designed to minimize the occurrence of loss, except in extreme market conditions.
Optimized Liquidation Process: Our smart system calculates the most effective liquidation method, including traditional auctions or External Liquidation Gateways.