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For Borrowers & Strategic Liquidity Providers

Yeap Finance provides powerful tools for borrowers seeking capital and for strategic liquidity providers aiming to enhance their yield generation.

Leveraged Liquidity Provision (Flagship Use Case)​

  • Scenario: A liquidity provider (LP) on a DEX wants to significantly increase their exposure to a specific LP position (e.g., ETH/USDC) to earn more trading fees and/or farming rewards, but they do not wish to commit substantially more of their own upfront capital. They are comfortable with the amplified risks, including impermanent loss.
  • Yeap Finance Solution:
    1. (Collateral Options): The LP can either deposit their existing ETH/USDC LP tokens into a Yeap Finance vault or deposit one of the underlying assets (e.g., ETH or USDC) as initial collateral via the Leveraged LP Token Protocol.
    2. (Borrowing):
      • If LP tokens were collateralized: They borrow one or both of the underlying assets (e.g., borrow more USDC and/or ETH).
      • If ETH was collateralized: They borrow USDC.
      • If USDC was collateralized: They borrow ETH.
    3. (Forming/Augmenting LP): The borrowed asset(s), along with the initial single-asset collateral (if used), are then combined to form new ETH/USDC LP tokens or to augment an existing LP position on the DEX.
    4. (Looping): This newly formed/augmented LP token can then be used as collateral within the same Leveraged LP Token Protocol to borrow further, repeating the cycle to achieve the desired leverage. This action increases their total LP value staked in the DEX pool, potentially leading to significantly higher yields from trading fees and any LP farming incentives, relative to their initial capital outlay.

Margin Trading (Leveraged Spot Positions via Position Protocol)​

  • Scenario: A trader believes an asset (e.g., SOL) is poised for a significant price increase and wants to maximize their potential profit by taking a leveraged long position. Alternatively, a trader might anticipate a price decrease in one asset and wish to borrow it to sell short (if the vault configuration and asset availability permit such a strategy).
  • Yeap Finance Solution for Leveraged Long: The trader deposits an accepted collateral asset (e.g., $10,000 worth of ETH) into a Yeap vault via its Position Protocol. With a configured LTV of 70%, they can borrow up to $7,000 in USDC. They then use this borrowed $7,000 USDC to purchase SOL on an external DEX. Their total exposure to SOL (or the asset bought with borrowed funds) is now amplified beyond their initial capital. The Position Protocol tracks the health of this leveraged position against the value of their ETH collateral.
  • Managing the Position: The trader must monitor their LTV and add more collateral or repay part of the loan if the price of ETH falls or SOL (if it also affects the overall risk calculation as determined by the vault) significantly, to avoid liquidation. This use case highlights how the Position Protocol serves as a robust engine for on-chain margin trading.

Funding Yield Farming Strategies (Beyond LP Leverage)​

  • Scenario: A DeFi user identifies a high-yield single-asset staking opportunity, a lending pool on another protocol with attractive rates, or a new yield farm that doesn't directly involve their existing LP positions.
  • Yeap Finance Solution: They could collateralize an existing asset (e.g., ETH) in a Yeap vault using the Position Protocol to borrow stablecoins (e.g., DAI). This borrowed DAI can then be deployed into the identified external yield farming strategy. The goal is for the returns from the external strategy to significantly exceed the borrowing costs on Yeap Finance.

Short-Term Capital Needs without Selling Core Assets​

  • Scenario: An individual or entity needs temporary liquidity (e.g., for a real-world expense, a tax payment, or to seize a short-term investment opportunity) but does not want to sell their long-term crypto holdings (e.g., BTC or ETH) and trigger a taxable event or lose potential upside.
  • Yeap Finance Solution: They can take an overcollateralized loan against their crypto assets using a Position Protocol, obtaining the necessary stablecoins. They can then repay the loan plus interest at a later date to reclaim their full collateral.

Fixed-Term, Predictable Borrowing (via specialized Borrow Protocols - Future)​

  • Scenario: A small project or business needs a loan with a clearly defined repayment schedule and a fixed interest rate for better financial planning and budgeting.
  • Yeap Finance Solution: If a vault supports a future Fixed-Term Loan Protocol, they could access capital with predictable costs, which is often preferable to variable rates for certain types of financing needs.