TOP 5 Reasons Why LL Is A Game-Changer On PulseChain

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By WaLLrus
Estimated reading: 4mins
LL is a gamechanger

PulseChain offers features that traditional financial products cannot. 

Namely, censorship resistance and the ability for significant price appreciation.

PulseChain needs more than just these two, however, if it wants to compete with the current establishment.

For example, it needs peer-to-peer lending, a native decentralized stablecoin, and other DeFi products.

Read on to learn why Liquid Loans is a game-changer and makes significant improvements to the PulseChain ecosystem.

1: USDL: A Truly-Decentralized Stablecoin

When users lock up their $PLS and mint USDL, they are creating, for themselves, a truly-decentralized, overcollateralized, algorithmic stablecoin.

USDL has many features which gives it this title of True-DeFi.

  1. Censorship-Free. Unlike USDC, or any of the other “fiat-backed stablecoin mafia” members, there are no central issuers with admin keys. Because of this, the LL protocol or the LL team does not have the ability to blacklist or “turn off” and USDL held by people they don’t like (even if they wanted to).
  2. Overcollateralized. Unlike UST, which at one point was only backed with a collateral ratio of 10%, USDL is fully-backed, often at a high premium. The system state consists of vaults with 110% collateral coverage ratio MINIMUM. If any vault falls below this level it will be automatically liquidated. This ensures overcollateralization of USDL.
  3. Direct Redemptions. The ability for any user to redeem USDL for the collateral (PLS) goes hand in hand with overcollateralization. Unlike USDT, USDL is directly redeemable for PLS within the Liquid Loans protocol. USDT, on the other hand, has strict requirements on who can redeem USDT for their “dollars” they may or may not hold. For example, only accredited investors with over $100,000 can perform a redemption of USDT. 
  4. Decentralized Oracle. The price feed which ensures accuracy of the collateral ratios within the Liquid Loans protocol is a massive vulnerability. Consequently, the LL team has gone through the process of bringing over a robust and truly-decentralized oracle network called Fetch to PulseChain. Contrast this with other DeFi protocols which use central oracles like Chainlink with admin keys and a centralized team.
  5. Trustless Yield. By depositing USDL in the Stability, holders of USDL can earn both PLS and LOAN token. The Stability Pool is permissionless, self-custodial, and optional. You do not have to give your private keys to another party and hope that they generate yield for you. You and the code do all the work.

2: LOAN: Risk-On, Trustless Yield

The LOAN Token is a yield-bearing token, which when staked, generates risk-on returns in the form of PLS and USDL.

The PLS comes from the redemption fees, and the USDL comes from the borrowing fees. 

LOAN token is a cryptocurrency with no peg mechanisms, so it will fluctuate in price much like other forms of cryptocurrencies. Since USDL will likely have large liquidity pools with PLS and PLSX, the price will move similarly to them due to Heart’s Law.

The LOAN token is yet another trustless, permissionless, and self-custodial staking token to earn yield on PulseChain.

3: Stability Pool: Risk-Off, Trustless Yield

The Stability Pool allows holders of USDL to earn risk-off, trustless yield.

Much like the LOAN Staking Pool, the Stability Pool does not rely on a central counterparty to earn funds, nor does it require a user to forfeit their private keys. 

In contrast, to the LOAN Staking Pool, the Stability Pool is risk-off, meaning that the principal is EXTREMELY unlikely to appreciate or depreciate significantly. If the peg mechanisms hold, USDL won’t oscillate much from $1 USD.

However, it is important to note that the USDL in the Stability Pool slowly converts into PLS. So if you’d like to remain as risk-off as possible, be sure to swap your earned PLS into USDL as often as it makes sense for you.

4: Never Needing to Sell $PLS

The Liquid Loans protocol enables PLS holders to extract value from their coins without needing to sell them.

When you open a vault and mint USDL, your PLS stays in your custody. At any time, you can repay your loan and retrieve your PLS. 

This provides users with two main benefits:

  • Not Having to Sell. By not selling, you avoid price impact and the fees associated with the platform you use.
  • Retaining Price Exposure. Successful cryptocurrencies have historically appreciated more than was ever thought possible. Along the way, there will be many temptations to sell and extract value. Liquid Loans gives holders the ability to cash out without selling.

5: Setting an Example For True-DeFi Going Forward

Liquid Loans is an immutable, audited, and governance-free protocol. It has no repayment schedule, zero-percent interest, community-owned fees and a decentralized oracle service. 

If blockchains are going to have a significant place in our lives going forward, the dApps built on top of them need to uphold their same principles of True Decentralization.

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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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WaLLrus is the Global Head of Growth and Partnerships at Liquid Loans, and host of The Weigh In With Wallrus podcast series. He has been in the crypto space since 2015, and is widely recognized as a DeFi thought leader and strategist.

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