With its value fixed at $ 1, DAI is a cryptocurrency that is frequently used for a reliable transaction in crypto lending processes. It’s an algorithmic stablecoin, which are issued via the Maker DAO smart contracts. There are as well other stablecoins – the asset-backed stablecoins (USDC, USDT, …), but let’s focus here on the DAI.
Why Borrow USDC From SmartCredit.io?
SmartCredit.io crypto borrowing flow for the borrower is the following:
- The borrower submits the loan request
- He will submit the collateral to the loan
- If he wants, then he can enter his data for the credit score calculation – a good credit score allows to reduce the collateral requirements and the interest rate as well
- A lender will accept the loan request either via the SmartCredit.io application or via a Personal Fixed Income Fund
- The borrower will receive the funds, his collateral will be locked
- At the end of the loan period, the borrower has to pay back the loan
- If the borrower defaults or if the collateral value is sinking too much, then the collateral will be liquidated
Benefits for the Borrowers of USDC Loans are the following:
- Borrowers will have a much lower collateral ratio than other platforms (for example Compound and Aave money-market funds)
- Borrowers will have a wide choice of collateral
- Borrowers will have a fixed interest rate, there is no danger of fluctuating interest rates (for example entering a loan contract with a low-interest rate and seeing how the interest rate will explode)
Why Lend USDC Loans From SmartCredit.io?
SmartCredit.io crypto lending flow for the lender is the following:
- The lender can accept borrower’s loan requests via the SmartCredit.io application. He will transfer the funds to the borrower. The borrower’s collateral will be held in the smart contracts until the end of the loan term.
- At the end of the loan, the lender will receive the principal and interest payments from the borrower
- If the borrower is not paying, then the borrower’s collateral will be liquidated and the proceeds will be used to pay the principal plus interest to the lender
- If collateral liquidation proceeds are not enough, then the loss provision fund will jump in and will fill the gap
- The lender can define as well a Personal Fixed Income Fund – if he does this, then the all lending process will be automated for the lender. This means the lender will earn passive income on his assets
Benefits for the Lenders of USDC Loans are the following:
- Lenders will earn fixed interest instead of fluctuating interest (like it is in Compound and Aave money-market funds)
- As SmartCredit.io is focussing very much on the borrowers, then there is always a demand for the new loans. This means the lender’s money is continuously working and not idle. This means better interest to the lender
- Lenders receive Credit-Coins (ccDAI, ccETH), which represent the underlying credit contracts. Lenders can use these Credit-Coins to pay next parties
- Lenders can earn easily Passive Income – they can set up their Personal Fixed Income Funds, which are investing fully automated