ADA Finance DeFi 101: Peer-to-Peer Lending Feeds Margin Trading

For this edition of the ADA Finance DeFi 101 series, we go deeper into some major features within the ADA Finance ecosystem: Lending, into Margin Trading, and how that correlates with the address milestone and DAO benefits. These features are critical to realizing our objective of providing innovative and transparent passive income opportunities within the DeFi ecosystem.

How does ADAFi Lending work?

Cryptocurrency lending is comparable to peer-to-peer lending in its operation. The ADA Finance platform allows lenders and borrowers to connect. ADA Finance loan deals, on the other hand, use cryptocurrency rather than fiat currency. Lenders choose their own rates for allocating their crypto assets.

Users typically lend their crypto assets for one of two reasons: margin lending or personal use. Once a lender’s funds are available, a borrower who believes the price of a certain coin will rise will ask to borrow a portion of the available funds. The borrower will then pay the given interest rate on the borrowed cryptocurrency.

How do I start making passive earnings through ADAFi Lending you ask?

ADA Finance is the first platform in the crypto sector offering peer-to-peer financing through smart contracts. Users are able to specify their requested daily interest rate (up to 2% daily) and the maximum period of the contract by posting loan request orders on the platform.

There are three possibilities for duration: 7, 14, or 28 days. An initial 30 minute accrued interest will be calculated when you take out a loan. Borrowers have the option of repaying the loan whenever it is convenient for them, within the time limit specified, in order to pay as little interest as feasible.

Users can also enable an auto-lending feature, which fills in the asset’s reserved amount, a minimum daily lending ratio (percentage), and preferred loan duration. On behalf of the user, ADA Finance will then automatically place the best possible ratio at the lending period.

The first truly decentralized liquidation process in the industry.

What is ADAFI Margin Trading?

People can exchange derivatives in a secure and transparent environment using ADAFi Swap. Since liquidations are triggered through a decentralized price feed via oracles, Margin Trading will only be allowed for assets that support a decentralized price feed, which offers trust and transparency whilst also ruling out manipulated liquidations for borrowers and margin traders. This makes this the industry’s first genuinely decentralized liquidation process.

Margin trading allows an investor to borrow against their existing crypto balance — or borrow crypto from a peer — to create more buying power. Essentially, margin trading allows traders to trade with more crypto than they personally have available.

By borrowing additional crypto, traders can use margin (extra crypto that is not theirs) available in ADAFi Swap to leverage trades which ultimately increases their profit potential, but also increases their risk. With that, when lending into margin trading on ADAFI swap, you share the profits by allowing the margin trader to trade your crypto, without sharing the risk.

How? ADA Finance is like no other DeFi platform in that it provides a unique lending process that protects you, the lender, from losing any funds when a margin trader is liquidated (or, loses all funds in a trade). How does this work? Well, through a smart contract, ADA Finance provides an insurance fund that receives 5% of all lending profits on the platform. This way, should a margin trader lose the crypto they borrowed from you, you are guaranteed to receive what you lent plus interest up until the moment of liquidation. This means you can lend with confidence, earning passive income without the risk!

15% of the lender’s realized profits go to the ADA Finance platform and get distributed as follows:

Traders will be required to keep a specific proportion of the position’s worth as collateral to keep leveraged positions open (105 percent ). The position will be liquidated if this is not fulfilled. Any deposits, withdrawals, or trades on Cross Margin can affect your collateralization level, and consequently your liquidation level.

Liquidity providers (lenders) on ADA Finance fill margin requests.

Borrow orders can be manually selected on ADA Finance in the DeFi section (lending) or directly on ADAFi Swap at the best available lending rates. There is a chance that the period of the lending contracts will be mixed if the margin is taken through ADAFi Swap. The margin trading cost will be 0.4 percent, and it will be split as follows:

• 0.3% liquidity providers ADAFi Swap

• 0.1% Platform to support the Margin technology

Affiliate and Address Milestones

As we’ve discussed in further detail with our previous articles, the ADAFi platform stands alone in the DeFi industry by offering an affiliate program. The affiliate program encourages you to build your own network of investors on the platform, allowing you to earn benefits from their investment activity. The affiliate program includes many different milestones for you to work towards and benefit from. In the context of lending into margin trading, the higher the milestone level you achieve, the higher interest you are paid when you lend crypto. The specific rewards are dynamic, dependent upon the terms of the smart contract, but regardless of the specific terms, your relative interest earned increases as you reach higher address milestones.

ADAFi DAO Program

You may have heard or seen the term “DAO’’ within the crypto industry. DAO stands for “Decentralized Autonomous Organization”, which means that it is an open-sourced blockchain protocol with elected members, who set governance rules that automatically execute against a smart contract or series of smart contracts. This means that certain actions or functions execute when the right conditions are met, without the need for human intervention or direction. The ADAFi DAO program is unique and designed to maximize your earnings, by providing three levels of participation and voting rights. These voting rights give you a voice in the design or enactment of new rules or in the proposed adjustment of existing rules, as market conditions change or new opportunities arise. Being a member of the ADAFi DAO also brings lucrative rewards and benefits to you as a member-based on your earned level in the DAO. There are three DAO levels, which are determined by the number of ADAFi tokens you are staking on the ADAFi platform. And as is consistent with other reward programs in the ADAFi platform, the higher the DAO level you are in, the more passive income you can earn.

The three levels of the ADAFi DAO are:

• Counselor — this is the lowest tier, which requires 25,000 ADAFi staked tokens
• Minister — the middle tier, which requires 50,000 ADAFi staked tokens
• Ambassador — the highest tier, which requires 100,000 staked ADAfi tokens

As a member of the DAO, when you lend crypto into margin trading, your potential interest earned is maximized if you are in the highest tier or the Ambassador level. As an Ambassador DAO member, you can receive an additional 1% of lending profits by lending your crypto to margin traders.

As you can see, lending your crypto to margin traders can be a very lucrative method for investing and earning passive income. And, the ADAFi DeFi platform rewards you for your participation in both the affiliate program and your level of membership in the DAO, by increasing your potential earned interest in realized lending profits. Finally, you can lend your crypto and have the peace of mind and confidence that your crypto is free from risk as you lend, due to the ADAFi insurance program.

So, why not lend your crypto to margin traders on ADA Finance and sit back and relax knowing that you’re making money as you sleep? Maximizing your passive income is our goal and mission at ADA Finance, and as we’ve outlined in this article — and other articles in this series — we’ve created the most innovative means in the DeFi industry to allow you to do just that.

Until our next DeFi 101 article ADAFiers! Stay safe, and Seasons Greetings from the ADA Finance Team!