Smart Holders Will Use Liquid Loans: Here's Why

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By Connor
Estimated reading: 3mins
smart holders

So you want to hold your PLS forever and #neversell. 

This would make you a holder.

But the question is, how do you become a “smart holder”? 

Most investors will agree that earning yield (as safely as possible) and minimizing tax burden is essential while holding.

Read on to learn how Liquid Loans allows holders of PLS to do just that.

Smart Holders Earn Yield with Liquid Loans

earn yield

Smart Holders want to maximize capital efficiency and minimize dormant capital while holding an investment long term.

Typically, they do this by finding safe ways to yield over the course of their holding term.

Currently there are two ways to earn yield on your PLS holdings:

  1. Validating. PulseChain Validators earn yield for securing the network. However, becoming a validator involves a lot of technical knowledge and considerable risks if done incorrectly.
  2. Liquidity Providing. Holders of PLS can deposit their coins into liquidity pools and earn fees as well as other rewards. However, doing this brings in the risk of impermanent loss as well as possibly losing your PLS bag for the coin or token that you pair it to. 

So, we need a third way to earn yield on your PLS without the risk of losing your PLS and without the need for technical know-how.

Liquid Loans allows smart holders of PLS to collateralize their coins and mint USDL.

This gives them several advantages:

  1. Retaining PLS. Smart holders of PLS can gain instant liquidity without losing their PLS bags and possible upside potential. As long as their collateral ratio is sufficiently high and they have access to USDL to pay off their debt in the case of a market downturn, then they will not lose their PLS.
  2. Yield Opportunities. Holders can take the USDL that they minted and find yield opportunities in a variety of different places. For example, they can deposit it into the Stability Pool and earn PLS and LOAN token, or they can provide liquidity with their USDL on PulseX or another DEX. 

Reducing Tax Burden with Liquid Loans

Smart holders know that when you sell an appreciating asset you pay capital gains tax in most jurisdictions. 

If the value of your sale is high, this could be a significant taxable event. 

Therefore, smart holders find a way to access liquidity on their holdings without selling. 

Elon Musk did exactly this with his Tesla Shares. Instead of selling them, he took a loan on them and used that money to live off of. 

The Liquid Loans protocol allows users to do just this with their crypto. 

Users can collateralize their PLS and receive USDL as a lona.

This has several advantages:

  1. Instant liquidity for further investing or spending.
  2. Avoidance of a taxable event (Consult a Tax Attorney in Your Jurisdiction)
  3. Not losing access to your PLS and its possible future price appreciation
  4. 0% interest

The Bottom Line: Smart Holders use Liquid Loans

For those who plan to hold PLS for the long-run, learning how to be a smart holder is key.

Smart holders of PLS will find ways to earn yield while waiting, as well as avoiding paying capital gains tax from selling.

The Liquid Loans protocol tackles both of these problems.

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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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