Crypto traders turn to fixed-income instruments such as bonds and stocks to diversify their investment portfolios. The cryptocurrency market is a legitimate source of debt securities, its reputation is no less than that of similar products, and it is a powerful economic force. With the help of interest rate derivatives, creditors in the cryptocurrency market, mainly lenders and borrowers, hope to stabilize income and reduce risks.
There are two types of interest rate derivatives in the crypto market: one can extend the loan period, and the other can increase interest rates.
In the traditional financial market, there is a big difference between the interest rate offered to borrowers and the interest rate offered to lenders. The same is true for the crypto financial market.
The same is true for the crypto financial market.
The interest rates of borrowers and lenders will fluctuate as the utilization rate of loans in a particular pool changes. The interest rate depends on the total amount available in the liquidity pool and is denominated in LP tokens. If people want to borrow money instead of funds in the liquidity pool, interest rates will rise; if more people try to lend than borrowers, interest rates will fall.
The utilization rate is between the total amount of tokens in circulation and the number of platforms used. The ADALend platform design allows the utilization of non-stable coins to be kept at a low level. In doing so, the platform will maintain more token circulation. More tokens in circulation will enable the platform to support liquidity mining, in which token holders will benefit from holding tokens by obtaining loan interest from borrowers. When the borrower pays off the loan, the lender will repay the interest to the token holder who has been holding the token; this is what makes the token a valuable asset.
ADALend protocol for efficient idle asset management
The agreement will reduce idle assets on the platform by transferring part of the idle assets to a stable exchange platform, and there will be no temporary losses within an acceptable range. The core program structure of the ADALend project includes the use of idle assets. Instead of storing your assets in a cold storage, you can rent or borrow them to support the ADALend Lending agreement. Not only will it help restore the idle state of assets, but it will also bring profits to asset owners through the sale of assets. In turn, this will benefit everyone in the blockchain market, so use the Cardano ecosystem to ensure fair asset distribution based on the terms of the loan arrangement between the borrower and the lender.
More about ADALend: https://adalend.finance
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