How to borrow against ETC on Constant
Claire is going to show you step-by-step how to borrow on Constant. And give you a couple of borrowing tips while she’s at it.
Greetings ETC lovers!
I’m Claire from the partnerships team at Constant — the leading crypto-backed P2P lending platform in Southeast Asia.
I had a great time in the AMA with you all last week want to again say how happy we are for all of the support we have received from you all and ETC Labs.
For those of you who missed the AMA, ETC has been listed as a collateral option for USD or stablecoin loans from Constant.
What does that mean?
Well, first I’m going to quickly tell you a bit about Constant.
Constant is a peer-to-peer(P2P) lending platform. We cut out middlemen to pair lenders directly to borrowers. All transactions on our platform are free and all interest is exchanged directly between lenders and borrowers. We only charge a 1% matching fee to borrowers - we have to make some money of course.
Our specialty at Constant is crypto-backed loans. To receive a loan, borrowers must send 150% of their loan value in cryptocurrency collateral to a secure escrow account. This is sent back to the borrower upon payment of the loan plus interest.
Right now we partner with Bitgo custodial services, the current industry-standard for crypto asset protection for escrowing collateral (read about that here)
I already know your next question;
Why put up 150 percent for a loan when you already have the money?
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.
Maybe you really want to stake on another crypto project but all of your spare funds are tied up in ETC.
A quick loan from Constant could be a great way to get real value from your ETC investment without selling it.
By borrowing on Constant, you can simply put up your ETC as collateral for a USD loan. And you will receive all of your original coins back upon repayment.
Let me show you how this is done.
1. Apply for a loan through Constant using your ETC as collateral.
The first step is to apply for your loan against your existing ETC. Constant’s loan-to-value ratio for ETC 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 280 ETC that I’d like to use as collateral. I can borrow 66% of the USD value of those 280 ETC which is $760.09. Our valuation of ETC 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 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 $760.09 to buy more ETC, but first, I need to send my collateral to the Constant escrow.
Once again, I can see the details of my loan and the amount of ETC I need to transfer. To get the loan matched, I need to send my 280 ETC to the address stated on the platform by copy/pasting the address or scanning the QR code.
Until you repay, your ETC collateral remains untouched and secured in BitGo. You can read more about our collaboration with BitGo insurance here.
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 ETC loan (it is more than $760.09 as I have money from other loans as well).
I will now 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 $760.09 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 ETC to increase their ETC holdings as much as 2.8x.
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 ETC as collateral for a further loan on Constant
I will now use my $760.09 USDT loan to buy ETC on Binance. This gets me 184 ETC (the price of ETC at the time I bought was 4.13 USD). With my new ETC balance, I can build my reserves higher by using the new ETC as collateral for another loan.
Now, this is familiar, right? I can continue applying for new loans, withdrawing USDT to keep buying ETC until I reach Constant’s minimum loan amount($50)
Here is the result: I started with 280 ETC. I now have 280 + 184 + 121 + 80 + 52 + 34 + 22 + 14 =787 ETC. I have nearly tripled my ETC holdings in just a few minutes. If ETC were to increase in value, you could easily pay back the interest on your loans and still have plenty of ETC 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.
Pro Tip: If you are afraid that your loan will be liquidated in the case of a flash crash, it is possible to use the new ETC bought with the loan to top up the collateral on your old loans. By increasing the value of collateral in your escrow account, the chances of your assets getting liquidated will be significantly lower.
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!
Please follow us on Medium for more news, views, and updates from the Constant team. If you have any questions or feedback, please join us on Telegram https://t.me/constantp2p