Use Cases

The main use cases of LotusSwap AI

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Having a novel design in the lending/borrowing space allows us to unlock several unique use cases, to name a few:

To communities/users:

• Non-liquidatable borrowing: Borrowers can borrow against their holdings without having to actively monitor their positions, only deciding at maturity whether to default or repay their loans.

• Downside protected borrowing: At maturity, borrowers have the option to default or repay their loans, this means that their downside (with respect to their capital) is protected.

• Yield swapping: In pools with interest-bearing assets as collateral (paired with the native asset as the supplied/borrowed asset), lenders can lend the native asset to lock-in a fixed rate. For example, lending DAI in a DAI/gDAI pool.

• Capital efficiency: Instead of selling their token holdings to capture another opportunity, users can simply borrow against their holdings, this removes the burden of 'opportunity cost'.

• Fixed-term lending/borrowing: Instead of having variable interest rates that is unpredictable (and can be costly for borrowers who are borrowing to hedge), a fixed-term lending/borrowing protocol offers predictability.

• Leverage looping: Borrowers can borrow tokens in loops to get leveraged exposure on the price of the token pair.

To teams:

• Productive treasuries: Teams are commonly rich in their native tokens, and oftentimes these assets are left idle. LotusSwap AI enable teams to lend out their native tokens in return for interests.

• Funding through debt instead of equity: Instead of having to sell their native tokens to fund operational costs (i.e., raising capital through equity), LotusSwap AI enables teams to borrow against their native tokens.

• Token utility for long-tail assets: Adding a collateral utility to a token is highly valuable, but conventional lending/borrowing protocols require oracle support to setup a market. The difficulty of getting their native tokens eligible for a feed (costly and requires deep on-chain volume) prevents projects from expanding their token utilities. LotusSwap AI changes this by removing all the dependencies and democratising access.

• Token buyback mechanism: As a lender/LP (in a pool where borrowers are using the native token as collateral), borrowers defaulting would allow the team to purchase their native tokens at a predefined price level, while earning interest at that.

Previous successes

Here are some pools we launched with our partners, that can only be done through our design:

USDC/ARB pool

• We launched two pools for USDC/ARB:

  • One allowing lenders to lend USDC, and borrowers to borrow USDC against their ARB holdings.

  • One allowing lenders to lend ARB, and borrowers to borrow ARB against their USDC holdings.

• The feat: We are the first money market for ARB. We launched this pool ~2 hours after the ARB TGE occured (March 23, 2023).

• How LotusSwap AI's design enable this:

  • Other lending/borrowing protocols require an oracle (that has really high refresh rate to account for the extreme volatility).

  • Oracle support for ARB was only live after ~1 day of the TGE.

  • Our oracle independence and non-active value monitoring allows us to launch without needing all the other infrastructural dependencies to stabilise.

USDC/plsARB pool

• With support from PlutusDAO, we launched a pool for USDC/plsARB:

  • Allowing lenders to lend USDC, and borrowers to borrow USDC against their plsARB holdings.

• The feat: We are the first money market for plsARB, and the most scalable way for plsARB holders to access capital.

• How LotusSwap AI's design enable this:

  • With there being no sufficient liquidity in the first 2 months of the launch of plsARB (a token with $9mn m.cap but ~$60k DEX liquidity), plsARB holders were essentially locked out from their positions.

  • There is no oracle support for plsARB.

  • Our oracle independence and non-liquidatable design allows us launch without needed sufficient on-chain liquidity.