Case Study #3: Using Liquid Loans to Stock up on Crypto During the Bear Market

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By Connor
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Crypto Lending Case Study

If you believe in crypto as a long-term investment, then it stands to reason that the best action to take in a bear market is accumulation.

As luck would have it, the Liquid Loans protocol offers a cost-effective way to get your hands on 3 different tokens: PLS, USDL, and LOAN.

Many users took advantage of this early. In the first 6 months of the protocol, these fast movers have been able to significantly add to their positions without having to insert any additional capital.

In fact, one individual wallet used 19.9 billion PLS to take out a 393,000 USDL on Day 1, which they then staked in the Stability Pool alongside a stake of 44.6 billion LOAN tokens.

Here’s how it went, and how we can learn a thing or two from their strategy.


This article is part of the Chain Reactions series: expert opinions on everything blockchain and crypto.

Key Takeaways

  • This Vault increased their PLS bag from 19.9 billion to 20.17 billion.
  • They increased their USDL bag from 393k to 455k.
  • They increased their LOAN bag from 44.6 billion to 63.6 billion.
  • LL offers a way to accumulate more PLS, USDL, and LOAN, without spending more money.

Step #1: Accumulating PLS

There are two ways that you can use Liquid Loans during this bear market to accumulate PLS. 

The first option is to use the Stability Pool. The second option is using the Staking Pool.

In the case of our Day 1 accumulator, they received a 2.33% return on their USDL principal during the first 6 months of the protocol. This means they earned roughly 97 million PLS to add to their vault.

Additionally, the Staking Pool earned them a 7.9% return in PLS on their LOAN principal. This means they also earned roughly 349.7 million PLS.

In total, this Vault was able to increase their holdings from 19.7 billion PLS to 20.17 billion PLS in the first six months of the protocol—without having to spend a single extra cent on PLS.

Step #2: Accumulating USDL

Crypto Loan Case Study

During a bear market, users may also find it useful to accumulate stablecoins. This gives them a plentiful stock of so-called “dry powder” to use when market conditions start to become more favorable.

Fortunately, the Liquid Loans protocol makes it easy to accumulate USDL as well.

That’s because the LOAN Staking Pools rewards stakers by giving them USDL. In the last 6 months, the Staking Pool earned this Vault owner a 15% return on the value of their LOAN principal.

So, in just 6 months, this user increased their holdings of dry powder from 393,000 USDL to 455,618 USDL for free. In the process, they earned 62,618 USDL.

Step #3: Accumulating LOAN

The final asset that the LL protocol allows you to accumulate is the LOAN token.

LOAN tokens are provided as a reward to users who stake USDL in the Stability Pool. Specifically, in the first 6 months of Liquid Loans being live, the Vault owner earned a 45.4% return on their principal.

This means that they managed to accumulate an additional 19 billion LOAN tokens!

As a result, their total LOAN holdings increased from 44.6 billion to 63.6 billion.

What Does This Mean For You?

While not everyone will have the same success as this Vault owner right out the gate, their technique does show us that Liquid Loans is a powerful way to accumulate during a bear market.

Most importantly, you can use LL’s features to accumulate tokens without spending any more money.

Having a way to effectively accumulate PLS, USDL, and LOAN for free is an incredibly powerful tool to have at your disposal during a bear market.

After all, who would say no to an easy opportunity to stock up on assets that have the potential to appreciate when the bulls start running again.

Find out just how easy it is to earn PLS, USDL, and LOAN, by dipping your toes in the LL Dapp today—there’s no minimum for getting started.

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Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.

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Connor

Connor is a US-based digital marketer and writer. He has a diverse military and academic background, but developed a passion over the years for blockchain and DeFi because of their potential to provide censorship resistance and financial freedom. Connor is dedicated to educating and inspiring others in the space, and is an active member and investor in the Ethereum, Hex, and PulseChain communities.

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