Vendor Finance
  • Overview
    • What is Vendor Finance?
    • Vendor Finance V2
      • Use Cases
      • Benefits
        • ✅Fixed Rates
        • ✅No Liquidations
        • ✅Fixed Terms
      • Definitions
      • How To's
        • Lender First Pool
          • Navigating the Create Pool Page
          • Navigating My Pools Page
          • Navigating the Borrow Page
      • Strategies
      • Protocol Fees/Pool Type
      • Developer Documentation
    • Vendor Finance V1
      • Use cases
      • Benefits
        • ✅No Liquidations
        • ✅Fixed Rates
        • ✅Fixed Terms
      • Definitions
      • Lend
        • ➕Adding Funds
        • ➖Withdraw Funds
        • 🤝Private Pools
        • ⚠️Token w/ No Oracle
        • 🔄Lender and Rollovers
      • Borrow
      • Repay Loan
      • Rollovers
        • 🔄Lender and Rollovers
        • 🔄Steps to rollover
        • 🔄Associated Fees
        • 🔄Lend Ratio Shifts
      • Defaults
      • Collect Payments
      • My Pools Page
    • Protocol Security
  • Links
    • Team
    • GitHub
    • Contracts
    • Branding
    • Discord
    • Medium
    • Twitter
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On this page
  • Use case as a lender
  • Use case as a borrower
  1. Overview
  2. Vendor Finance V1

Use cases

Use case as a lender

  • Allows any protocol to tap into its treasury and turn it into a lending & borrowing platform, on their own terms. A lender can lend assets out of their treasury or wallet, which would allow them to earn interest on their otherwise idle funds

  • Borrowing power is unlocked for the protocol’s native token.

  • Can act as a buyback mechanism. During a default period, the protocol simply get’s their own tokens back at a predetermined price which reduces circulating supply or can be given to token holders

  • Can be used as a funding/raising tool in the future (roadmap item)

Example of lending: A protocol has $10,000,000 in USDC. The protocol can then lend out those funds at an interest rate of 1% due at the end of the month. The lender knows exactly how much interest they will make and the exact date to expect the income.

Use case as a borrower

  • Deposit collateral instead of selling your token for funds

  • Borrow without worry of liquidations

  • Do anything you want with your loan including farming at a higher APR than your loan

  • Use it as a hedge against your deposited collateral. If you loan becomes greater in value than your collateral by the repayment due date, keep you loan and default on your collateral.

  • Borrowing power is unlocked for the native token holder

Example: A lender is accepting wETH as collateral with a lent token of USDC. You deposit your 1 wETH to receive $1,000 USDC at a fixed interest rate of 1% due at the end of the month. You can borrow the $1,000 USDC and farm at a higher interest rate of 10%.

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Last updated 1 year ago