Through lend/borrow ALEX is establishing a fundamental building block of Bitcoin finance: fixed-yield and fixed-term financial instruments.
In contrast to all other DeFi protocols, ALEX employs dynamic Collateral Rebalancing Pools (CRPs) to avoid forced liquidation risks.
To observe CPR performance using historical data, please see our simulator: https://app.alexlab.co/crp-simulator
Due to the volatility of this bear market we are currently experiencing, hundreds of millions of dollars in collateral have been liquidated across DeFi. Scarred by the experience, those being forced to liquidate are unlikely to participate in DeFi anytime soon.
Without the basic and “boring” service of lending and borrowing, DeFi will remain a niche crypto sector without prospects for mass adoption.
Maximizing Bitcoin Capital Efficiency
ALEX is building the fundamentals for the Bitcoin economy. Borrow/lend is vital to maximizing your capital efficiency, by getting the greatest amount of “work” out of your capital.
With lend/borrow we are no longer a zero-sum economy where you either hold one token or another. Now you can use your capital as collateral, borrow against it and pursue other opportunities.
You can avoid the “10K Bitcoin for two pizzas” scenario, as you don’t need to sell or close your positions to access capital you may need short term.
We understand that our users want to use STX or xBTC as collateral and are scratching their heads at the ALEX/atALEX pair. The reason we’ve selected this pair is for it to serve as a “test flight” for borrow/lend, both for ALEX2 as well as for our users.
ALEX and atALEX are unique in being deterministically linked in value, meaning there is a lower likelihood of a major divergence in price than there is with other pairs. As we observe the performance and utilization of ALEX/atALEX, we will be preparing to include additional token pairs in the coming weeks.
There are people who need funds today and are willing to pay a premium to receive it. There are people who need their capital in the future and are willing to receive a premium in exchange for the risk of lending it out. ALEX simply connects them through trustless peer-to-peer transactions that settle on the security of Bitcoin.
How It Works
ALEX enables users to lend and borrow digital currencies through the pooling of funds. Borrowers submit collateral and can borrow up to the maximum Loan-to-Value (LTV) ratio. The interest for borrowing the tokens is paid upfront by the borrower upon executing the smart contract.
Lenders receive yTokens (yield tokens), which represent the principal and the interest accrued.
yTokens provide a fixed-income interest rate. Lenders are guaranteed to receive the interest accrued at the maturity date through redemption of yTokens via smart contract.
Each loan is secured by the collateral of the borrower which provides risk mitigation against default.
When the borrowing period concludes, borrowers may either “rollover” to extend maturity, or claim their collateral where:
Claim Value = Borrow Collateral Value - Borrowed Value.
First you’ll need to select the token you wish to lend. Visit the ALEX DAPP, connect to Hiro wallet (upper right corner), go to the “LEND” tab on the top menu and you’ll see a list of available tokens.
Having selected your preferred token:
You will notice in the panel that you are minting yToken with the amount minted changing relative to what you input for the amount deposited.
yToken acts as the smart contract equivalent of a Certificate of Deposit (CD) in TradFi.
Lenders can redeem the yToken at maturity with guaranteed fixed-rate yield (rate displayed on the lend panel) having accrued to the principal.
Lenders can choose to sell only a portion of their yTokens and hold the rest to be redeemed upon maturity.
When the yToken reaches its maturity block, the lender can select to “claim” their principal and accrued interest.
ALEX also offers the option to “rollover” your deposits to extend the maturity date into the next deposit period.
By selecting the “Rollover” button, the smart contract will automatically rollover your deposited principle and interest together into yToken earning the new cycle’s fixed interest rate.
First you’ll need to select the token you wish to borrow. Visit the ALEX DAPP, connect to Hiro wallet (upper right corner), go to the “LEND” tab on the top menu and you’ll see a list of available tokens.
Having selected your preferred token:
After the borrow transaction proceeds, you will receive the borrowed tokens immediately in your wallet.
The borrow panel provides vital information for your borrowed tokens such as:
The borrower can claim the collateral deposited upon maturity.
When the borrowing period gets to maturity, borrowers may claim their collateral by selecting the “Claim” button.
Borrowers do not need to manually repay the borrowed tokens when claiming their collateral, because Claim Value = Borrow Collateral Value — Borrowed Value.
Due to changing market conditions, borrowers may wish to extend the borrowing period.
Borrowers can manually roll over the borrowed contract to the next maturity block.
When doing so, the protocol will hold your collateral balance and roll it into the next borrowing period. This will help mitigate permanent losses due to shifting market conditions.
Once you’ve claimed your collateral, you will need to wait for the transaction to proceed to receive your remaining collateral value.
Explore the ALEX Bitcoin DeFi platform today!