USDC Loans

With its value fixed at $1, DAI is a cryptocurrency that is frequently used for reliable transactions in crypto lending processes. It’s an algorithmic stablecoin, issued via the MakerDAO smart contracts. There are other asset-backed stablecoins (USDC, USDT), but let’s focus here on the DAI.

Why Borrow USDC From

The crypto borrowing flow for the borrower is as follows:

  • The borrower submits their loan request.
  • He then submits collateral to the loan.
  • He can then enter his data for a credit-score calculation—a good credit score allows him to reduce the collateral requirements and the interest rate.
  • A lender will accept the loan request either via the 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 sinks 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 (e.g., Compound and Aave money-market funds).
  • Borrowers have a wider choice of collateral.
  • Borrowers have a fixed interest rate; there is no danger of fluctuating interest rates (e.g., entering a loan contract with a low-interest rate and watching the interest rate explode).

Why Lend USDC Loans From crypto lending flow for the lender is as follows:

  • The lender can accept the borrower’s loan request via the application and transfer funds to the borrower. The borrower’s collateral will be held in the smart contract 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 does not pay, 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 inadequate, then the Loss Provision Fund will jump in and fill the gap.
  • The lender can also define a Personal Fixed Income Fund. If he does, the lending process will be automated for the lender, and the lender will earn passive income on his assets.

Benefits for the Lenders of USDC Loans are the following:

  • Lenders earn fixed interest instead of fluctuating interest (as it is in the Compound and Aave money-market funds).
  • io is focused very much on the borrowers, so there is always a demand for new loans. The lender’s money is continuously working and not idle, which means better interest to the lender.
  • Lenders receive Creditcoins (ccDAI, ccETH), which represent the underlying credit contracts. Lenders can use these Creditcoins to pay subsequent parties.
  • Lenders easily earn passive income and can set up their Personal Fixed Income Funds—fully automated investing.