The Ultimate Guide to LOAN Token from Liquid Loans

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By Connor
Estimated reading: 4mins
Loan Token

Imagine you could own a bank.

Anytime somebody pays a bank fee, you get paid. 

But in this case, you don’t have to work for the bank, worry about employees, or pay rent.

You simply interact with code on the blockchain. Using your phone or desktop - you press a few buttons and you're done!

The LOAN token allows anybody to do just this with the Liquid Loans protocol on PulseChain.

What is the LOAN Token?

Liquid Loans Token

The LOAN Token, also called the Liquid Loans Token, is a PRC20 on PulseChain which is created by the Liquid Loans Protocol. 

By staking LOAN token, users receive rewards from the fees of the protocol in proportion to their size in the pool. 

The Liquid Loans protocol has two fees which pay the LOAN stakers:

  1. LOAN Initiation Fee: Everytime a user locks PLS in a vault to mint USDL they pay a fee of 0.5-5% of their PLS. 100% of this fee in PLS is distributed to LOAN stakers. This essentially means that Liquid Loans is a community bank because it redistributes the fees back to the users rather than serving the interests of a founding team or business.
  2. Redemption Fee: Everytime a user redeems USDL for PLS, they also pay the same fee. 100% of this fee in USDL is distributed to the LOAN stakers.

The LOAN token is a form of utility token, in that when staked, it results in fee generation. It is not, however, a governance token, as the Liquid Loans protocol is governance-free.

How To Buy LOAN Token

Follow these steps for how to buy LOAN token:

  1. Set-up a self-custody wallet such as Metamask
  2. On-ramp via a centralized exchange, credit card on-ramp, or bank-account on-ramp onto the PulseChain network. KangaExchange and OKX both currently list $PLS
  3. If you can’t on-ramp directly to PulseChain, then on-ramp to Ethereum and use PulseRamp (USA citizens can’t onramp using the centralized exchanges above.
  4. Take your on-ramped or bridged tokens to PulseX and swap them for LOAN tokens.

Other Ways to Get the LOAN Token

If you were not one of the many who sacrificed for the right to have truly decentralized stable assets, then there are three ways to get LOAN token (other than buy it off the market):

  1. The Stability Pool

The Stability Pool is a liquidity pool full of USDL which functions to automatically repay the debt undercollateralized vaults and seize its PLS as a reward.

Users who choose to deposit USDL in the pool receive rewards in PLS and LOAN token. 

The amount of LOAN token issued to stability providers decreases overtime, much like the Bitcoin Halving. 

The earlier you get into the pool, the more LOAN tokens you will receive.

  1. LP Rewards

In order to encourage users to provide liquidity on PulseX for the USDL:PLS pair, the Liquid Loans protocol will issue LOAN to liquidity providers.

The Liquid Loans dApp will have a function that allows LPs to deposit LP tokens from the USDL:PLS pair and receive an issuance of LOAN token. This will be available for the first 42 days.

The pair is incentivized because more liquidity through USDL helps protect the Liquid Loans system and also encourages the use of truly decentralized stable assets.

Why the LOAN Token Can Appreciate

LOAN token has # reasons why it can appreciate in value:

  1. Staking it Earns PLS. PulseChain is already a successful blockchain and users who make a lot of money will look to cash out at some point. They will look to the Liquid Loans protocol to extract value which increases the value proposal for LOAN.
  2. Staking it Earns USDL. LOAN staking also earns USDL, a truly decentralized, fully-backed admin key free stable asset. USDL has many advantages over other stable assets including censorship resistance, overcollateralization, and trustless yield. 
  3. Community. PulseChain has a passionate and loyal community which does not wilt during hardship. The Liquid Loans protocol and the LOAN token supports the long-term interest of PulseChain.

What To Do with LOAN Token

There are fundamentally two different ways you can use LOAN token:

  1. Staking Pool. Users can place LOAN into the staking pool in order to earn the loan and redemption fees of the protocol. This is the core utility of LOAN token.
  2. Liquidity Providing. Users can pair LOAN token with USDL, PLS, PLSX or another token on PulseX or another exchange. Users can earn trading fees for being an LP, and potentially incentive token if a pair is added to the farms.

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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 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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