How to build a TOMO reserve using your existing assets as leverage
Hi there,
I’m Claire from the partnerships team at Constant.
As you know, you can now deposit TOMO as collateral for a loan through our platform. But did you know you can also use your existing TOMO to buy more TOMO?
Whether you’re building a reserve for trading, masternode application, or voting rights, you can use TomoSwap to instantly convert your loan into more TOMO.
Here’s how it works…
PLEASE NOTE: Borrowing against your TOMO involves risk. The strategy that follows is similar to leverage or margin trading, so please only borrow what you can afford to repay.
1. Get a loan through Constant using your TOMO as collateral
The first step is to apply for a loan against your existing TOMO. Constant’s loan-to-value ratio is 66%, which means you can borrow up to 66% of the market value of your TOMO holdings.
Let’s take a look at an example. I have 960 TOMO that I’d like to use as collateral. I can then borrow $309.
I can use that $309 to buy more TOMO, and in turn, use my new assets as collateral for another loan. But first, I need to send my collateral to the Constant escrow.
Until you repay, your TOMO collateral remains untouched. To send your collateral, copy and paste the address in your TomoWallet or simply scan the QR code.
2. Transfer and convert your loan to TOMO
Now, you can transfer CONST to your TomoWallet address (if you don’t have a TomoWallet, create one).
Once you’ve sent CONST to your TomoWallet, you can convert it to TOMO using TomoSwap.
For example, I can convert my 309 CONST loan into 609 TOMO (see below).
3. Use your new TOMO as collateral for a further loan
You just got new TOMO. Now you can build your reserves further by using your new tokens as collateral for a new loan. But remember — only borrow what you can afford to repay.
I can borrow $195 against my 609 TOMO. Then I simply return to step 2 to swap it for another 378 TOMO.
I started with 960 TOMO. I now have 960 + 609 + 378 =1947 TOMO. In other words, I’ve more than doubled my TOMO holdings in just a few minutes.
4. Repeat as necessary!
You can repeat this cycle as often as you like. Keep track of your loans through your Constant Accounts page so you know how much to repay and when.
This is an easy way to build your reserves when you’re unable to raise the funds immediately, but it does come with risk. If you can’t repay, or your collateral falls in value, your collateral will be sold to repay investors. So please only borrow what you can afford to repay.
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