Private, single token loans:
Perfect for communities of strong holders. This function of GovLend, available for even our bronze tier members, allows someone within our approved collateral communities to offer fellow members within that same community an attractive, customized, private loan offer for USDT, USDC, or DAI using the communities respective token as collateral. The terms of the loan may have also been discussed beforehand between the parties, allowing the borrower to build the ‘perfect’ loan offer for the lender, ultimately benefiting both parties, as well as the respective community because the token remains in circulation rather than being sold on the open market in an effort to raise capital.
This GovWorld feature becomes available at the silver tier level and is perfect for borrowers who hold multiple long-term investments and want to unlock additional capital for whatever reason(s). This multi-token loan offer feature is also great for lenders who wish for a more diversified portfolio of cryptocurrency collateral and a better CollateralFi score to choose from when deciding which loan offers have the best terms with the lowest amount of liquidation risk.
Ascend tier levels:
While this is a risky strategy indeed, some people may choose to borrow USDT, USDC, or DAI to purchase more of any governance token(s) in order to move up a tier level (or two) and increase benefits such as greater allocations of exciting new presales and IDOs.
Short the market:
The Reverse Loan Builder now allows anyone who is bearish the market the ability to short it by offering a high APY% to long-term holders of the respective altcoin using their stablecoin as collateral. In order to short the market, all borrower would need to do is sell the altcoin into stablecoin at the time of loan activation, wait for a dip in price, buyback the altcoin at a lower price, pay back the loan in full (Ie. the same number # of tokens borrowed), then the borrower keeps the difference in profit. Currently, there isn't a way to profit from most altcoins in a down market because of the lack of lending liquidity.
Earn passive income:
In the example above we showed how a borrower of an approved altcoin could short the market and make a profit, however what can the lender expect to gain? Answer: Passive Income. For example, if an altcoin borrower offers a 48% APY paid out in USDT to a lender holding an approved altcoin (30 day loan of $100,000) the lender stands to earn $4,000 in USDT in passive income from an altcoin they were planning to hold long-term anyway. Of course, the lender should take into account all the terms of the loan to determine if the risk/reward ratio. This functionality is perfect for strong long-term holders of any approved altcoin to earn additional passive income.
Create lending liquidity:
Due to a lack of lending liquidity, for most cryptocurrency projects unlocking stablecoin loans against the value of their token has yet to become a DeFi reality. Some of these communities may want to nominate their token for approval as collateral on the GovLend protocol so they too can unlock liquidity. Collateral tokens do NOT need to be strategic partner tokens in order to be approved as collateral. This is good for strong holder community members who want the ability to borrow against, rather than sell, their respective token. The GovWorld governance committee and community will review each token and bring on only the best as collateral!