How and why to leverage your WAN on Constant
Sit back. We’re going to walk you through the benefits of crypto-backed lending on our platform.
I’m Claire from the partnerships team at Constant — the leading crypto-backed P2P lending platform in Southeast Asia.
I just came back from Singapore Fintech Week 2019 with a big list of new friends and exciting collaborations for collateral on Constant.
I met a lot of people the other week, but my meeting with Jack from Wanchain was one of the most memorable. I have rarely met a more passionate and humble person seeking to provide advanced technology for mass adoption.
Since our recent partnership announcement, we have been extremely grateful for the warm welcome by the Wanchain family. We are excited to collaborate with WAN and are even working on becoming a validator on the WAN network.
If we achieve this goal, we will be able to run a node with the collateral from WAN loans. The revenue from our node will allow us to decrease the loan interest rate for your WAN loans as low as 2% a year!
But this will only be possible in the future when we have enough collateral built up.
Now I want to answer one question that I have frequently heard: “Why should I borrow against WAN on Constant?”
I’m going to first give you a couple of basic use cases for a crypto-backed loan from Constant using your WAN.
Let’s say you need to make an emergency hospital visit. Or you need to put down a payment on something big like a car, but you don’t have the cash you need right now.
Or maybe you really want to dig in on another crypto project but all of your spare funds are tied up in WAN.
A fast loan from Constant could be a great way to get real value from your crypto investments without selling.
By borrowing on Constant, you can simply put up your WAN as collateral for a USD loan. And you will receive your original coins back upon repayment.
Now, before I give you some more use cases, I want to walk you through a quick tutorial on how to leverage your WAN holdings on our platform.
1. Apply for a loan through Constant using your WAN as collateral.
The first step is to apply for your loan against your existing WAN. Constant’s loan-to-value ratio for WAN is 66%, which means you can borrow up to 66% of the market value of your WAN holdings.
Let’s look at an example.
Say I have 5000 WAN that I’d like to use as collateral. I can borrow 66% of the USD value of those 6000 WAN which is $648. Our valuation of WAN is updated from Binance in real-time.
For the next step, I will choose my yearly interest rate. This is automatically 9% (we have recently adjusted our default rate to benefit borrowers more) you can always change your rate. Here I set my term to the default of 30 days.
At the bottom of the box, you can see the estimated time to get matched is within 12 hours. This period will change depending on the interest rate I choose. Generally, the higher the rate, the faster I will get matched and vice versa.
Now that I have my loan, I can use my $648 to buy more WAN. But first, I need to send my collateral to the Constant escrow.
To get the loan matched, I need to send my 5000 WAN to the address stated on the platform by copy/paste the address or scan the QR code.
Until you repay, your WAN collateral remains untouched in a secure escrow account outside the Constant system.
2. Withdraw your loan
After sending collateral, I can proceed to my account page. Here I can see all of my past transactions, loans, and investments. There are 3 possible loan statuses:
- Pending: I have not sent collateral yet and I need to send it as soon as possible to get my loan.
- Matching: Constant is finding me an investor with the same term and rate.
- Matched: the loan is matched and I have USD in my account.
As you can see in my account, I now have USD from my matched WAN loan (it is more than $648 as I have money from other loans as well).
I will be able to withdraw my money as either fiat currency or crypto. With fiat, I will have to complete a KYC validation. KYC is not required for withdrawing crypto. I will withdraw my $600 as USDT by choosing crypto withdrawal.
Now, I just need to input my wallet address to transfer the amount free of charge. Here I chose my USDT address on Binance, but you can transfer to anywhere in any type of stablecoin supported by Constant (USDC, DAI, TUSD, GUSD, BUSD, etc)
While we previously outlined the most obvious use case for a loan from Constant, we have noticed a large number of our customers use our lending service for another purpose.
By using our platform, users can use WAN to increase their WAN holdings as much as 2.5x.
We are going to show you how you can do this.
Please remember that borrowing against your existing assets to finance new assets involves risk. Please only ever borrow what you can afford to repay.
How to Use your new WAN as collateral for a further loan on Constant
Using my previous USDT loan on Binance, I can trade on the exchange for more WAN. With my new WAN balance (3082 WAN at the time I bought), I can build my reserves higher by using the new WAN as collateral for another loan.
Now, this is familiar, right? I can continue applying for new loans, withdrawing USDT to keep buying WAN until I reach Constant’s minimum loan amount($50)
Here is the result: I started with 5000 WAN. I now have 5000 + 3082 + 2054 + 1366 + 909 + 601 + 395 =13407 WAN. I have more than doubled my WAN holdings in just a few minutes. If WAN were to increase in value, you could easily pay back the interest on your loans and still have plenty of WAN left over.
You can repeat this cycle as often as you like.
This is an easy way many of our users have used to build their reserves. But it comes with some risk.
If you can’t repay your loans within 72 hours, or your collateral falls in value, all collateral will be sold to repay investors.
So please only borrow what you can afford to repay.
You can keep track of your loans through your Constant Accounts page so you know how much to repay and when.
Thank you for reading, and happy borrowing!
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