LENDING AND BORROWING WITH 0VIX PROTOCOL
0vix Protocol is a decentralized lending protocol built on the Polygon network that allows users to lend, borrow and earn dynamic interest on their assets. In other words, it allows the users to put their assets to work rather than just sit around in some wallet doing nothing, all without having a middle man.
There are various strategies to employ 0vix to earn passive income
THE LENDING STRATEGY
If you are looking for a slow and steady yield farming strategy, then lending with 0vix is a way to go. 0vix currently has six available assets to be supplied for lending. They include USDC, USDT, DAI. WBTC, WETH and MATIC. If you have any of these assets in your wallet, then put it to work by supplying it for lending:
Connect your wallet or fund your account: You need a compatible wallet like metamask so you can connect to the site at https://app.0vix.com/.
Supply your cryptocurrency: Once connected, navigate to the specific asset you want under supply market and deposit it for lending. By default, the toggle option for using your asset as collateral is turned on. If you do not want that, you can turn it off. By interacting with the protocol, you get oToken which is a representation of your deposit plus interest. For example, by depositing MATIC, you get oMATIC in you wallet.
Collect your earnings: By supplying assets, you earn with a variable interest rate and will also get 0vix token as a reward. With MATIC, you will earn an APY of 0.51%.
For an adequate guide, refer here
BORROWING STRATEGIES
Loans on the 0vix Protocol are over collateralized implying you have to supply collateral that is worth more than enough to cover potential losses in cases of default. As against just lending your assets on the platform, you can take another step forward by using your supplied asset as collateral to borrow more crypto and increase your earnings.
Find the procedure involved in borrowing crypto assets on 0vix here
Here are two borrowing strategies that you can utilize to earn passive with 0vix Protocol
- Long Exposure
Leverage results from using borrowed funds to expand your capital base and the potential returns on that capital base. In other words, you borrow funds so you can invest more, and as a result — earn more. You initiate a long trade when you buy an asset with the expectation to sell it at a higher price in the future and make a profit. Here is an example of borrowing to buy crypto. Let us imagine you have MATIC tokens in you wallet and you see the potential of its price going higher soon and you wish you had more MATIC. You can supply this your MATIC tokens to 0vix and use it as collateral to borrow USDT at a low APY.
- Provide MATIC as collateral and earn interest
- Borrow USDT at low APY and use it to buy more MATIC by swapping on a DEX like Quickswap.
- If MATIC increases in value, you can swap your loan amount back to USDT to pay the protocol and get back your collateral. You can get to keep the remaining balance as your interest.
Also note, while waiting for the MATIC you swapped from the borrowed USDT to go up in value, you can as well put it back into the 0vix Protocol and earn interest.
- Short Exposure
A short trade is initiated by borrowing an asset to sell it, with the intent to repurchase it at a lower price, take a profit, and return the shares to the owner. Here is an example - Let us assume you have USDT in your wallet and you predict that the price of MATIC will drop so you can purchase it at a cheaper price. You can:
- Supply USDT as collateral and earn interest
- Borrow MATIC and swap it for USDT on a DEX like QuickSwap.
- If MATIC decreases in value, you can swap your USDT to MATIC to cover your loan and get back your collateral. Also, you will be able to make profit by repaying the loan at a lower value ( in dollar terms) than you initially paid for it.
While waiting for MATIC to dip, you can as well supply this swapped USDT in step 2 back to the protocol to earn more interest.
These are basic strategies you can to earn passive income with 0vix Protocol. There are more complicated strategies one can use but it is all up to you. However, before executing these strategies you must know that they come with risks.
Take note that by interacting with 0vix Protocol, you will be faced with risks portfolio exposure, liquidation depending on your collateral and smart contract vulnerabilities. The 0vix Protocol is well aware of these risks and are continually reviewing their smart contract and assessing risks. It is passing through extensive tests so that risks are reduced and the funds of users are free from undue loss.
If you are want to explore these strategies, visit https://app.0vix.com/ today and kickstart your journey with 0vix Protocol.
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Reference
https://medium.com/@komobongsilas/defi-strategies-to-earn-with-0vix-protocol-6f4e45712838
