Lending Vault & Leveraged Vault

Lending vault

Lending vault is a product with relatively stable profits. It is designed for investors with low-risk appetite. You can use this vault to supply for the asset you want to lend. After selecting the amount of tokens and completing the transaction, your tokens will start working for you. Deposited tokens will be lent out to borrowers from the leverage vault. And depositors will earn profits according to the APY of each lending vault.

Leveraged vault

The leveraged vault is built on top of the lending vault. It is designed for users who are risk-seeking. Investors who are able to afford the impermanent loss are seeking relatively higher yields. They can use the leveraged vault to amplify their returns. After investors using leveraged vaults to borrow assets from lending vaults, Universe Finance will integrate the borrowed tokens and their own money to provide liquidity in the Uni-V3 smart vaults on Universe Finance. The U-Tokens (the certificate to prove how much you deposit in a smart vault) will be used as collateral.

Benefits

1. Provide Users with Multiple Choices

Universe Finance is a platform based on risk grading. We meet the needs of LPs who have different risk appetites through a series of products. The lending vault is developed for users who are risk reversal. The leveraged vault has relatively high risks and is designed for users who are risk-seeking. Users can create long or short trading LP positions by depositing in the leveraged vault, to earn trading income based on market evaluation and earn high staking income.

2. Lower the risks

(1) We provide 2–8 times leverages which are in fixed proportions. The leverages vary with different vaults. Universe Finance offers larger leverages to popular cryptocurrencies like stable coins and provides exotic pairs with smaller leverages like WETH-LOOKS. The amount of money you can borrow is in proportion to the deposits. Take our newly-launched USDC-WETH vault as an example. If you deposit 2.23 WETH+4200 USDC and choose 2 times leverage, you can also borrow 2.23 WETH+4200 USDC from the lending vault. And the liquidity you provide in our smart vault will be 4.46 WETH+8400 USDC. Users don’t need to swap because of the fixed proportion. It, therefore, saves the transaction fees and reduces the loss caused by slippage.

(2) The leverage strategy is neutral. Investors don’t need to long or short the tokens to leverage their assets. It helps leveraged vault users lower the risks while harvesting high yields. This strategy can also help users avoid liquidation effectively and ensure the safety of their funds.

3. Improve Capital Efficiency

With leveraged vaults, investors can capitalize on the borrowed money to increase the returns on their investment. Topped with the already improved capital efficiency of Uniswap V3, our leveraged vault offers a great opportunity to amplify the returns.

Note

1. The lending and leverage vaults are built on top of our current smart vaults in the Polygon section. The deposit of leverage vaults will be dual-sided which stays in step with its corresponding smart vault.

2. The bigger the capital is, the greater the impermanent loss will be. Investors need to be aware of the risk before they deposit.

3. To ensure the safety of lenders’ funds, the compulsory liquidation will kick in when borrowers’ debt ratio reaches a certain threshold. Users can add their positions in advance to reduce the debt ratio and avoid liquidation.

4. The profits always come with risks. If the profits grow at 10% and you choose a 2 times leverage, you will earn up to 20%. And vice versa, your loss will be doubled if you use the 2 times leverage.