Hey @cryptodaz2. In your opinion, what are the main benefits

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Kava Official

Guille | Kava Team (Please, be careful for impostors)

Hey @cryptodaz2. In your opinion, what are the main benefits

of USDX being enabled as collateral? Would you say it is better than borrowing against BUSD, for example?

#blockchain #cryptocurrency #english #kava

0

20.10.2021

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Guille | Kava Team (Please, be careful for impostors) Автор вопроса

CryptoDaz (Darren)
Enabling USDX as collateral on Kava Lend finally g...

Thanks for the answer. This is very valuable information!

0

20.10.2021

CryptoDaz (Darren) · Accepted Answer

Enabling USDX as collateral on Kava Lend finally gives some usage to USDX tht has been lacking. I'm sure users will find many ways to use this facility. Some of the initial options I can see would be 1. Increasing a users yield by simply borrowing more USDX and resupplying it back to Kava Lend (there will be a limited of supply of 5m USDX initially) 2. Borrow BUSD to mint more USDX and supply back to Kava Lend to increase yields (both BUSD borrow rewards and USDX supply rewards) 3. If USDX is trading below $1.00 then borrowing BUSD, swapping it for underpriced USDX, supplying it to Kava Lend to borrow more BUSD and repeat to increase yields (as per #2 above), but if USDX is below $1.00 then this method allows you to leverage you original USDX more than in #1 and #2, the lower the price of USDX the better this option is This would apply some extra buying pressure of USDX helping to maintain the $1.00 peg 4. A user may wish to take advanatage of the excellent yields on KavaSwap and borrow perhaps SWP, Kava or XRP to earn both Hard borrow rewards and SWP rewards from KavaSwap 5. Shorting an asset - If a user believes an asset is overpriced and due a pull back and would like to 'short' an asset, they can do this very easily by simply. Example: If a user wishes to short BTC, they simply borrow BTC against the USDX collateral (leaving a margin of safety to avoid liquidations) swap it for BUSD or USDX on KavaSwap (or sell it on an exchange), then at a future point when BTC has fallen to say $35k, you simply buy back the BTC and repay your BTC debt, netting a profit (plus Hard borrow rewards) If the price of BTC instead rises and you make a loss, you do atleast have the borrow rewards which may cover or drasticaly reduce the loss) 6. Going long on an asset - If a user feels an asset is going to rise in value then they can borrow BUSD against the value of their USDX collateral and use it to purchase the asset they are feeling bullish on. In the future if that assets rises they can simply sell the asset for a profit

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Hey @cryptodaz2. In your opinion, what are the main benefits

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