How to borrow against ONT on Constant
Crypto-backed loans are some of the most useful trading tools you’ve never heard of. We want to walk you through how to get one on our platform and put it to use.
I’m Claire from the partnerships team at Constant — the leading crypto-backed P2P lending platform in Southeast Asia.
You may or may not have heard the news, but as of last week, ONT has been listed as a collateral option for USD or stablecoin loans from Constant.
What does that mean? It means that ONT holders can now get the fiat value of their holdings for trading or daily expenses without divesting.
First I want to 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 are free and all interest is exchanged directly between lenders and borrowers. We only charge a small 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?
I wanted to write this article to tell you all of the benefits of crypto-backed borrowing with ONT.
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 want to stake on another crypto project but all of your spare funds are tied up in ONT.
Maybe you hold a large volume of ONT and are afraid selling such a large amount will change the price significantly.
A quick loan from Constant could be a great way to get real value from your ONT investment without selling it.
By borrowing on Constant, you can simply put up your ONT 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 ONT as collateral.
The first step is to apply for your loan against your existing ONT. Constant’s loan-to-value ratio for ONT is 66%, which means you can borrow up to 66% of the market value of your ONT holdings.
Let’s look at an example.
Say I have 2600 ONT that I’d like to use as collateral. I can borrow 66% of the USD value of those 6000 ONT which is $887.23. Our valuation of ONT is updated from Binance in real-time.
For the next step, I will choose my yearly interest rate and my length of term. However, if I want to match instantly, I can toggle on the “use market rate” feature that will find me the most suitable term and rate.
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 $887.23 to buy more ONT. But first, I need to send my collateral to the Constant escrow.
To get the loan matched, I need to send my 2600 ONT to the address stated on the platform by copy/paste the address or scan the QR code.
Until you repay, your ONT 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 ONT loan (it is more than $887.23 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 $887 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 ONT to increase their ONT 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 ONT as collateral for a further loan on Constant
Using my previous USDT loan on Binance, I can trade on the exchange for more ONT. With my new ONT balance (1709 ONT at the time I bought), I can build my reserves higher by using the new ONT as collateral for another loan.
Now, this is familiar, right? I can continue applying for new loans, withdrawing USDT to keep buying ONT until I reach Constant’s minimum loan amount($50)
Here is the result: I started with 2600 ONT. I now have 2600 + 1709 + 1074 + 705 + 463 + 303 + 198 + 128 = 7180 ONT. I have nearly tripled my ONT holdings in just a few minutes. If ONT were to increase in value, you could easily pay back the interest on your loans and still have plenty of ONT 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.
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 ONT 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!
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