Contest Submission: Leveraging DeFi while using Tinlake


Almost everyone here believes in crypto’s and blockchain’s future I assume. Therefore, almost everyone holds some tokens. I for example want an exposure to many tokens including WBTC, ETH and many DeFi tokens. I also want to participate Tinlake pools and for this I need some stablecoins, namely DAI for example. What do I do?

Converting your ETH to DAI and supply it to Tinlake pools is obviously an option but it is not ideal. It’s not DeFi-ish :slight_smile: What do we do then?

Beauty of DeFi… You can supply your tokens to different protocols and borrow DAI to use at Tinlake pools!

There are some stuff you need to consider of course. First, you need to check the interest rates. At some point, you need to pay your debt so you do not want to pay a lot of interest. Try to find the best one. That’s why we have websites like DeFiPulse and we can check the rates and find the best one.

You need to dive in what these platforms offer and how you can leverage them separately. For example, you’ll earn COMP if you use Compound. I’ll continue with that. AAVE is also a nice option, they offer stable APR on borrow so you’ll have no surprise. You can also check the health factor on AAVE.

health factor

“The health factor represents the safety of your loan derived from the proportion of collateral versus amount borrowed. Keep it above 1 to avoid liquidation.”

This is why you do not want to borrow the maximum amount. Play it safe in case the tokens you provided as collateral tank. Okay, let’s keep going with Compound.

Step by step explanation:

This assumes you have enough WBTC and ETH.

  1. You’ll provide your WBTC and ETH (there are other options like UNI if you have those you can also supply those) and borrow DAI in return. I do not recommend borrowing the maximum amount cause it can lead to liquidation in case ETH and WBTC prices decrease sharply. You’ll also earn COMP on Compound.

  2. You’ll provide your borrowed DAI to Tinlake pools (for TIN or DROP) and start earning RAD. I’d personally prefer TIN to maximize the return. It’s a little bit riskier but I believe it is worth it.

These 2 steps can actually work quite well but you need to check the APY on both Compound and on Tinlake. The APY you get from Tinlake should be able to pay your borrow interest.

This is where playing with RAD can become handy. I hope there will be other incentives for holding or staking RAD that can help you boost the APY. If there was a Sushiswap RAD-ETH pool for example, it would be nice. Sushiswap Onsen paved the way for new projects. It provides high APY in Sushi. Then, we can also use our earned RAD and earn Sushi by this liquidity mining. Then you can swap your Sushi for ETH and complete the above steps once again.

I believe RAD will be a solid one so I think it will worth borrowing some DAI from Compound. I also believe ETH and BTC will still perform well so it is a win-win. When you’re done you’ll have your WBTC-ETH and plus you’ll have COMP and RAD. I don’t think paying that DAI back will be a problem :slight_smile:

DeFi is a money lego. You can use almost every penny you have and have an exposure to many different platforms. There are vaults, liquidity mining programs, farms, borrowing platforms etc. Tinlake comes in and bring real world assets to DeFi and DeFi’s liquidity to real world assets. That’s why I believe it’s going to do really well. Let’s see :slight_smile: