By now most have heard about the collateralization that is coming to Polycub. While we do not have any details, this is something that most likely will help LBI a great deal.
@silverstackeruk and myself were chatting the other day. We both realize that the Leofinance team is offering up some amazing possibilities. The returns that LBI (and @spinvest) can achieve are amazing.
One of the reasons for the optimism is because of the fact that one of the biggest risks with DeFi is eliminated. We can go for outstanding returns without fear of a rug pull. That is one of the biggest downsides to many of the yield farming projects. Go for the amazing APRs and find out all the money was taken one day.
We all know how Khal operates, how he is looking long term. This aligns with LBI's view of things. We take the approach of "Get Rich Slowly". Unfortunately, as much as we try, the slowly part simply might not be possible.
Of course, I doubt anyone really complains about outsized returns.
Source
As you can see, minimizing risk is vital to the LBI project. This was modeled after SPInvest, a fund where we made many different moves but had very few losers. We do not engage in massive speculation and are not into the proverbial rolling the dice. Instead, we focus upon quality projects where we can get a solid return, often compounded through some effort.
What Leofinance is creating through Cubfinance is offering us so much potential.
The most recent announcement is that we are going to be able to leverage the xPOLYCUB that is being held. Through this process of collateralization, we will be able to take the money from that "loan" and put it elsewhere. Here is where the details are necessary but I have a feeling it will be tied to something within the entire ecosystem.
Thus, LBI could potentially improve its position in some other holdings by putting the valued locked up in xPOLYCUB to use. The project is going to be a self-payback program where the proceeds from the yields will help to pay down the loan.
What this could look like is something along these lines:
xPOLYCUB is used for a loan. Perhaps 50% is the cap so if LBI has 100 xPOLYCUB, we can put up 50. If the value of xPC is $50, that is $2,500 we will get (I will exclude fees and whatnot for this example).
Let us say the xPOLYCUB generates a 35% return. This is still in force during the loan (akin to how one still get the inflation even if HP is delegated out). So there is a solid return there on the $5K.
With the $2,500, let us say that is used in a LP that pays out 60%. This means we will generate $1,500 in a year from the LP proceeds.
Here is a simple example but it does show the power of leverage. Basically we will be earning 35% on $5K and 60% on $2,500, while holding only $5K. Since the value if xPOLY could keep increasing over time, we could keep repeating this process but using larger numbers.
A decision could be made to take the proceeds and push them back into LEO purchases. Or they could filter into the weekly earnings and be part of the dividend payments. Either way, it can quickly become part of the feeder system back into the core LBI holdings.
Keep in mind the annual target of "Get Rich Slowly" is 20%. We know that 20% return over a long enough period of time will evolve into some big money.
If we happen to keep exceeding that, well we apologize in advance.
Article by @taskmaster4450le.
Posted Using LeoFinance Beta
Just wondering but what would the interest be charged by PolyCUB for the loan? Ideally, the yield earned from investing should be greater than the interest charged but it all depends on PolyCUB. Does this mean that LBI plans on investing in xPolyCUB or some of the farms to get more PolyCUB to pay off the interest?
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Well I was not familiar with LBI project but PoluCub is now a sensation in this platform and almost everyone is talking about it. I appreciate it.
LMAO. Don't! 🙏
I have a question, probably I have missed this news but does LBI has a stake xPolyCUB?
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I still don't quite understand the whole loaning out money part of DeFi. I feel like there should be some risk involved, but in every example I have seen until now it just isn't there. I guess if you took that $2500 and invested it in something that got rugged it might be a downside, but it doesn't sound like that is the case. The harvested gains from whatever is left on the platform goes towards paying off the loan? Is that correct? Forgive my ignorance, like I said, this is one piece of DeFi that I haven't mastered yet.
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please apologize more often :P