Revolutionizing Crypto Borrowing: Cross-Chain Lending Simplified 💸 Zero Interest, No Liquidations, No Expiry — Unlock the full potential of your Bitcoin and Ethereum today 🔥
Welcome to a new era in decentralized finance! ShapeShift is introducing a transformative step in decentralized finance with its new Lending feature. Users can now lend their Layer 1 assets like BTC and ETH and borrow assets across different chains using a USD-denominated debt with groundbreaking terms:
✅ Zero Interest: Say goodbye to hefty interest rates.
✅ No Liquidations: Your collateral is safu.
✅ No Expiry: Keep your loan for as long as you like.
Whether you're an experienced DeFi user or just starting to explore the exciting world of blockchain, ShapeShift Lending offers a revolution in ease and security. Visit 👉 https://app.shapeshift.com/#/lending
For a limited time celebrating the launch of this feature, ShapeShift has ZERO lending fees. Until the FOX community votes to add fees, app.shapeshift.com will be the cheapest place to borrow against your Ethereum and Bitcoin!🔥
The amount of debt borrowers receive in proportion to assets provided (collateral) is based on the Collateralization Ratio (CR). Depending on market conditions, CR can range from 200% to 500%.
- If CR = 200%, you must supply $200 worth of $BTC as collateral to borrow $100 USDC.
- If CR = 300%, you must supply $300 worth of $BTC as collateral to borrow $100 USDC.
- CR 200% = 50% LTV (Loan-to-Value Ratio)
- CR 300% = 33.33% LTV (Loan-to-Value Ratio) And so on.
Higher CR means users need to supply more collateral against the borrowed asset. Debt is denominated in TOR, a USD equivalent, and can be repaid in any THORChain-supported asset, including stablecoins.
Lending is now available for ETH and BTC as collateral, with more options such as BNB, BCH, LTC, ATOM, AVAX, and DOGE coming soon. You can borrow any asset supported by ShapeShift — including ERC-20 tokens on Ethereum, Avalanche, and more.
How to Open a Loan
How to Repay a Loan
Visit 👉 https://app.shapeshift.com/#/lending Click the “Your Loans” tab
What makes ShapeShift Lending best?
Stress-free Loans ShapeShift’s Lending uses THORChain in the backend to create the simplest crypto borrowing experience for users. By removing barriers around collateral (safe with no risk of liquidation), debt (0% interest to worry about), and loan terms (no expiration), the result is a stress-free experience.
0% Interest, No Liquidations, No Expiry — how? Utilizing THORChain’s groundbreaking tems are part of a strategic design for ShapeShift new Lending feature. When a loan is opened, the collateral provided is swapped to $RUNE, and the difference between the collateral value and the loan value is burned.
More borrowers drive up the collateralization ratio, increasing stored equity versus issued debt. By not pressuring borrowers to repay quickly, the system attracts more outside capital, increasing the value and stability of the network, making lending more attractive and beneficial for both borrowers and ShapeShift. Therefore, there’s no need for interest, liquidations, or expiration.
Collateralization Ratio THORChain uses Layer 1 asset collateral to issue dollar-based debt, holding the collateral as equity. The more collateral added relative to Liquidity Pool depths, the higher the Collateralization Ratio. Early participation is key for a safer system. Since there’s no liquidation or interest, borrowers might be less inclined to repay loans, thus boosting THORChain’s equity value.
TOR Stablecoin: Internal Price Oracle THORChain’s TOR is a unique internal pricing oracle that remains properly priced even during stablecoin volatility. It can’t be traded or held at this time, and its price is derived from the median price of all stablecoins on THORChain (USDC, USDT, BUSD, LUSD, GUSD, USDP, DAI, etc).
Safety First: Risk Management and Scaling THORChain’s Lending parameters were designed to avoid over-leveraging or taking on unjust risks for borrowers and THORChain. Block Science performed a comprehensive report on the risks of THORChain’s lending protocol, complete with economic simulations.
Lending safety mechanisms include:
- Throttling: THORChain aims to ensure the collateral is always secure and controls the speed of new debt opening through circuit breakers to avoid exceeding network liquidity.
- Loan Caps: Lending is capped based on the outstanding RUNE supply, currently consisting of a 500M RUNE hard limit. ~15M RUNE is already burnt due to non-upgraded BEP2/ERC20 RUNE.
To ensure safe scaling, on lendings initial launch, only 1/3rd of the burnt RUNE (~5M) was available for loans. More RUNE will be burnt when loans are opened/closed in favorable conditions, and the internal swap fees across loans permanently burn RUNE, so the gap should continually increase. As more RUNE is burnt and the gap grows, additional loans can be created.
Protection against $RUNE Inflation If RUNE price falls drastically against collateral assets, then net inflation of RUNE could occur due to excessive minting of RUNE from total loan closures vs loan openings. THORChain Lending has a built-in circuit breaker to pause new loans and disable lending if minting causes the total supply to exceed 500M RUNE. In such a scenario, THORChain Reserves will step in to cover the remaining collateral payouts. You can learn more here.
Frequently Asked Questions
Q. Can I partially repay my loan? Debt can be partially repaid, but a borrower will only receive their collateral back when the debt is paid in full.
Q. What happens if I overpay my debt? Overpayments are credited towards the next loan the borrower opens.
Q. Is there a best time to open or close a loan? Yes, it is best to open and close loans during times of low volatility. To protect the network from price manipulation, virtual pool depths for lending shrink during times of increased volatility (liquidity fees can greatly increase). Managing loans during times of low price volatility on app.shapeshift.com will yield the most desirable results. Patient borrowers pay the least fees.
Q. Will I always receive my full collateral back? You will receive your full collateral back upon repayment minus slippage fees incurred from the loan opening and closing process. During low volatility, fees will be lower. During times of high volatility, fees will be higher, as outlined above. Patient borrowers pay the least fees.
Q. Who provides the assets for me to borrow? RUNE is swapped to the borrowed asset via the liquidity pools, then sent to the borrower. Therefore, as long as THORChain pools are available, there are always assets available to be borrowed. The deeper the pool depth, the less slippage incurred.
Q. Where is my collateral stored? The collateral is swapped to RUNE via the pools. Thus, nobody “stores” the collateral in custody. As long as THORChain pools are healthy and functioning, any collateral deposited will be swapped to RUNE, followed by arbitrageurs rebalancing the pools as usual.
Q. What happens if my collateral value drops? As per above, the collateral has already been swapped to RUNE at the moment of loan opening. Therefore, borrowers are not under any risk if collateral value drops. This is how THORChain’s Lending’s zero liquidation design is achieved.
Q. Who is the counterparty to my loan? The THORChain protocol and all RUNE holders are the counterparty to each loan. The RUNE burn/mint mechanism means RUNE concentrates/dilutes (among all RUNE holders) as loans are opened and closed. Liquidity providers and Savers (Earn) are not directly lending their assets to borrowers. The pools are just the conduit to swap between collateral and debt.
Q. Which assets can I pay down my debt with? Debt can be repaid with any THORChain-supported asset. Assets used to repay loans will be sold for TOR to repay the debt, since debt is denominated in TOR.
Q. Can I borrow more if my collateral increases in value? No, when a loan is opened, the full debt (based on the current Collateralization Ratio) will be issued. There is no option to request additional debt unless the borrower repays the original debt, fully redeems the collateral, then reopens a fresh loan.
Q. Can I open another loan if I have existing ones? Yes, wallets with existing loan positions can open a new loan by depositing fresh collateral. New debt will be issued based on the new collateral and the current Collateralization Ratio.
Q. When will lending be available for more collateral options? The lending protocol initially supports BTC and ETH. The functionality to support lending on all Layer 1 gas assets on ShapeShift — BNB, LTC, BCH, ATOM, AVAX, and DOGE — is already available and simply needs to be turned on by the validators through mimir.
Q. Is lending compatible with Streaming Swaps? No. Debt issuance and loan repayment are subject to traditional time-optimized slippage. Use app.shapeshift.com for the most accurate estimates.
Documentation and Community Education
The best place to deep dive into THORChain Lending is the THORChain Docs and the Architecture Design Record (ADR). The THORChain community has also created a treasure trove of resources to help borrowers understand Lending Mechanics.
A new era in DeFi Lending!
THORChain Lending on app.shapeshift.com is not just an evolution but a revolution for decentralized finance. By eliminating interest, liquidations, and expirations, borrowing becomes a much more accessible and stress-free experience. Visit app.shapeshift.com to explore Lending for yourself and experience the future of decentralized finance today.
ShapeShift is the leading multi-chain decentralized exchange (DEX) aggregator powered by THORChain, LiFi, 0x, 1inch, Osmosis, CoWSwap, and more. Permissionlessly buy, sell, track, trade, and earn with Bitcoin, Ethereum, Atom, DOGE, and more the best rates on app.shapeshift.com.