What does Protradex do?
From a traditional financial point of view, derivatives are the best way to respond to trends such as hedging risks and making big gains with a small amount. However, there are still no mature derivatives products for NFT assets, especially blue-chip assets, in the industry. We see that, relying on the huge potential of the NFT market, innovative derivative products are expected to promote the healthier growth of the NFT track, and at the same time help more users to gain more from the NFT market based on derivatives gameplay. profit.
In this part, we currently launched a NFT-based decentralized leveraged mortgage lending agreement, which is different from the current NFT lending platforms on the market. ProTradex not only allows users to mortgage NFT assets into the fund pool to obtain encrypted assets such as USDT, but also Support users to mortgage encrypted assets in the agreement, further borrow funds through leverage and use them to purchase blue-chip NFTs on the platform, and make profits when the price of NFTs rises. Based on this, we can not only provide services in the form of over-collateralized loans for NFT holders, but also provide perpetual NFT loan services for non-NFT holders.
Specifically, it consists of three parts: Perpetual Loans, Flip Loans, and Bands.
Perpetual lending
Perpetual contract is a transaction method with higher flexibility, lower transaction threshold, wider participants and higher transparency, which provides traders with more trading opportunities and risk management tools. In the field of cryptocurrency, perpetual contracts occupy a relatively high market share of derivatives, and are currently one of the main trading methods of cryptocurrency derivatives.
Drawing on the perpetual contract model, we allow users to purchase blue-chip NFT assets in the form of on-chain perpetual contracts (with leverage). We provide a leverage model, that is, users can use a small amount of funds to purchase higher-value NFT assets as investment targets through leverage (1% prepayment is required when creating a loan), and as the floor price of the NFT they purchase continues to rise, Users can deliver at any time to earn income.
In this sector, ProTradex adopts a custom LTV (borrowed asset/mortgaged asset value ratio), which ranges from 0% to 40% (currently generally 25%), and a higher LTV means a higher liquidation price, and vice versa The same is true. The purpose of this design is that we hope to bring investors a wider range of choices in order to obtain broader returns through more sophisticated trading strategies.
Different LTV ratios mean different early warning boundaries (30% by default), we will remind them through Discord, and even if their margin ratio is 0%, their borrowed NFT assets will enter the "12H Grace period", but He still has a 24-hour final repayment opportunity (loan value + interest + 10% penalty), and failure to increase the margin within this period will trigger liquidation.
The NFT perpetual contract market is an emerging early-stage market. As a permissionless on-chain protocol, ProTradex’s perpetual lending transaction threshold is lower, which is expected to attract more traders to participate in the NFT market, thereby increasing market liquidity and Trading volume, and based on leverage, users can use smaller capital to control larger positions to obtain higher returns.
For NFT holders, this method can also be used for hedging, thereby avoiding the risks caused by NFT market fluctuations. In this way, we are releasing the value stored in NFT and indirectly providing liquidity to it.
Flip lending
Of course, we are also providing opportunities for NFT holders to increase the utilization rate of funds. Any blue-chip NFT holder can use our Flip loan to obtain funds in the form of over-collateralized loans to release the value in NFT.
Borrowers can obtain a short-term loan with a loan amount of 20%~50% and obtain assets. The loan period is 7~14 days. Borrower has to repay the loan + accrued daily fee within the next 7-14 days. When a borrower initiates a loan, the protocol counts the first day, from the start of the loan, and a fee escalation occurs every 24 hours.
The interest rate offered to the borrower at the time of the loan will depend on the capital utilization rate of the total loan pool at that time, and can be calculated through the simplified interest model of the Flip loan.
If the borrower does not repay his Flip loan by the end of the 7-14 day period, his collateral NFT will enter the "12H Grace period", during which he can still repay the loan + interest + 10% penalty. If he does not repay the debt within the 12-hour grace period, his collateral NFT will be transferred from his wallet to the raffle pool.
ProTradex is providing NFT holders with more flexibility. They can obtain the required liquidity without selling NFT. Flip lending is also a rare NFT in the industry that can provide a floating LTV ratio. In the lending agreement, our purpose is to fully release the value in NFT and bring them more choices. Of course, more sophisticated investors may choose higher LTV, but this will also take higher risks.
Bands
Bands is the most competitive product we have launched. As a new lending product, it has several very competitive features, such as higher loan-to-value ratio (LTV), lower fees, lenders can provide Partial loans are funded and sold immediately to other lenders (via AMMs).
In this product model, we designed an AMM model, and borrowers and lenders provide liquidity to each other to promote the operation of this sector.
The user experience for borrowers is very simple and similar to their experience with our existing products. With bonds, borrowers can still benefit from an improved user experience through bulk lending and 12-hour grace period protection. They can use their own NFT to provide LTV between 40% and 100%, and provide borrowers with ultra-high asset utilization in a more aggressive way. Of course, there is up to 2% upfront fee on loan creation, and for full loans (100% LTV), lenders have the option to obtain default collateral (NFT).
Therefore, compared to other similar products, our Bands have:
LTV is higher than competitors (more efficient liquidity)
fees are lower than competition
Can be borrowed/repaid in batches to obtain a better user experience than competitors
12-hour grace period protection, providing a better user experience than competitors
Of course, lenders with sufficient funds can also benefit from it and provide better services to borrowers.
Lenders are usually users with sufficient funds (USDT, etc.), and in Bands, they can decide to use Easy Mode or Professional Mode. Simple mode is very similar to their experience with our existing product (they deposit assets into a lending pool and earn yield over time), while professional mode is for users who are willing to manage loans manually in order to earn higher income.
Lenders can get higher APRs with riskier loans
Lenders can partially fund loans (e.g. half of SMB vs. 1:1 loans on other platforms). Smaller lenders can now lend money to more expensive but less volatile blue-chip NFTs Loans
are tradable - lenders can exit/sell the loan to another lender (via AMM) immediately before the loan matures, This way the liquidity lent out does not stagnate over the life of the loan
Lenders have the option to earn compound interest on defaulted NFT
lenders deposited into the easy model loan pool when funding the full loan
In addition, Bands offers bulk lending services, namely Multiple NFTs can be operated at the same time to obtain higher loan efficiency, which is also the first in the NFT lending sector.
In Protradex, the liquidated NFT assets will enter the lottery pool and draw prizes for users with lottery tickets. We will introduce details of this part in the following content.
We are convinced that derivatives will be the best solution to solve the lack of liquidity and low capital utilization in the NFT market. As an experimenter and explorer in this field, we are also digging deep into the lack of NFT in the form of on-chain derivatives. The value of liquidity.