These days, because the 60th phase of Binance #Launchpool is underway, I have seen a lot of introductions about clisBNB, but there are no risk warnings for related products. This may be to attract more readers to read the article, and there are even some exaggerated elements, such as 1 BNB is used as 3... (I don’t mean to target a particular blogger here, I just want to express this idea, please don’t criticize me).
I also searched and checked a lot of related articles and short articles. Most of them were probably users who had never used the #Lista loan product and directly copied other people's articles or official introductions;
There are a few careful bloggers who have product screenshots to guide the operation steps, as well as some articles that can be seen as personal explanations. I still have to give thumbs up to these high-quality bloggers
We all know there is no free lunch in the world❗️
I am not opposed to the reasonable way to increase the utilization rate of funds, and #Lista is indeed a good financial product. Compared with other lending products, it can open up the connection between CeFi and DeFi, which is something that many lending products cannot do;
But! Using loan products to increase the efficiency of capital use is essentially a leveraged behavior.
The process is roughly as follows: stake $BNB ➡️get clisBNB ➡️borrow $lisUSD ➡️buy BNB ➡️repeat the above steps
This is what is commonly known as "revolving lending". Each time a cycle occurs, leverage is added once. Because there is a "minimum mortgage rate" of 120%, the funds will become smaller with each cycle, so the total number of cycles is limited, but a larger leverage ratio can still be added.
⚠️At this time, if the decline of BNB exceeds the liquidation standard of the mortgage rate, Lista will automatically liquidate the mortgaged principal to repay the loan and prevent bad debts. This is equivalent to a liquidation and the assets will be reduced to zero.
We often see how much USD or tokens have been liquidated for a certain asset on a certain chain when the price drops sharply. This is the case
Even if it does not reach the level of liquidation, when you repay the loan after mining is completed, you will also have to bear the greater loss of the currency price drop. There are a few times when the price continues to rise after the end of mining, but in most cases there will be more or less declines.
In addition: Loans themselves also have interest. The annualized interest rate for loans at the time of editing this article is ≈19.5%
I believe that friends who are familiar with loan products understand and know these
Since Launchpool's yield rate is not particularly high recently, it is not as exaggerated as many bloggers say. If you borrow a small proportion of money at a time and increase the efficiency of fund use appropriately, there is no problem.
⚠️Never use circular loans
⚠️Never use circular loans
⚠️Never use circular loans
Important things must be said three times. If the cryptocurrency market experiences a drastic fluctuation, it will be too late to regret!
