Levvy Finance, developed by The Ape Society (Ape Society is a collection of 7,000 unique NFTs generated on the Cardano), is a Peer-to-Peer (P2P) NFT lending protocol. It serves as a platform where NFT owners can access immediate liquidity from lenders at market-efficient rates. This innovative solution addresses a significant gap in the NFT market, providing a much-needed service for NFT owners who wish to leverage their assets without selling them.
The protocol is designed to be inclusive, catering to all NFT collections, regardless of their size or established reputation. This approach democratizes access to liquidity in the NFT ecosystem, leveling the playing field for all participants.
Understanding Levvy Finance
Levvy Finance allows NFT owners to access instant liquidity from lenders at efficient market rates, thereby addressing a significant need in the NFT market. The protocol is designed to cater to all collections, not just larger and more established ones, thereby leveling the playing field in the NFT ecosystem.
One of the key features of Levvy Finance is its ability to fix the interest rates and duration of loans within the protocol itself. This innovative approach allows lenders to compete on the value of the loan given for each asset. It provides borrowers with the best loan opportunities while simultaneously making Levvy Finance a simple and attractive platform for lenders to generate yield on their ADA, the native cryptocurrency of Cardano.
With Levvy, NFT holders have the opportunity to unlock liquidity without the need to sell their NFTs. By utilizing their NFTs as collateral, users can instantly take loans based on the value of their assets. Loans are not automatically foreclosed. Lenders have the option to manually initiate the foreclosure process. The interest rate represents the amount that the lender will receive and the borrower will pay for the loan within a designated two-week period. The interest rate remains fixed regardless of the timing of loan repayment.
Borrowing with Levvy: A Detailed Look
Borrowing with Levvy Finance is a process designed to provide NFT owners with quick and easy access to liquidity. This is achieved through a competitive lending system that optimizes the loan-to-value ratio for borrowers.
The loan-to-value ratio is a financial term that expresses the amount of a loan compared to the value of the asset that secures the loan. In the context of Levvy, the asset is the borrower’s NFT, and the loan is the amount of ADA they are borrowing. By optimizing this ratio, Levvy ensures that borrowers can get the maximum possible loan amount based on the value of their NFT.
Once a borrower decides to take a loan, they accept a loan offer from a lender. At this point, their NFT is locked in the Levvy smart contract as collateral. This means that the ownership of the NFT is transferred to a secure smart contract on the Cardano blockchain. This smart contract holds the NFT securely until the loan is repaid.
The use of a smart contract as an intermediary ensures that the process is transparent and secure. It also means that the borrower can’t access or sell the NFT until they repay the loan, which provides security for the lender.
If a borrower fails to repay the loan within the agreed-upon terms, the lender has the ability to foreclose the NFT used as collateral. Foreclosure is a process where the lender takes ownership of the NFT to recoup the funds they lent. This means that the NFT is transferred from the smart contract to the lender’s wallet.
Lending with Levvy: A Detailed Look
Lending with Levvy Finance is designed to be a straightforward and user-friendly process, providing lenders with a unique opportunity to generate yield on their ADA.
When offering a loan, lenders can submit one or more offers with the amount they are willing to lend. This flexibility allows lenders to diversify their lending portfolio and manage their risk effectively. They can offer different amounts to different borrowers, thereby spreading their risk across multiple loans.
Once the loan offers are submitted, lenders can then patiently await the acceptance of their loan by a borrower. This eliminates the need for lenders to actively seek out borrowers, making the lending process more passive and less time-consuming.
During this waiting period, the lender’s ADA remains staked in their stake pool. This means that the ADA continues to earn staking rewards until it is accepted in a loan offer. This feature ensures that the lender’s ADA is always working for them, either earning staking rewards or generating yield through loans.
In the event of a loan default, where a borrower fails to repay the loan within the agreed-upon terms, Levvy Finance provides lenders with a safety net. The lender has the option to foreclose the loan, which means they receive the NFT used as collateral by the borrower. This NFT can then be sold or held by the lender, providing them with a means to recoup their loaned funds.
Fee Structure of Levvy Finance: An In-Depth Look
Levvy Finance has adopted a dynamic fee structure that is designed to ensure a fair distribution of fees between lenders and borrowers. This structure is closely tied to the user’s COTAS stamp level, a unique feature of Levvy Finance that rewards active and committed participants with potential fee discounts.
The COTAS stamp system is a tiered structure where users can attain different levels, each offering its own set of benefits. The higher the stamp level, the lower the fees a user has to pay. This system encourages users to be more active and committed to the platform, as higher engagement can lead to substantial savings in fees.
The fee structure starts at 1.25% for users without any stamp. As users attain higher stamp levels, the fees progressively reduce. For instance, users holding a Level 3 stamp are subject to a fee of just 0.75%. It’s worth noting that Gold Passport holders automatically benefit from Level 3 stamp fee discounts, although they can still upgrade their stamps for aesthetic purposes as they complete different milestones.
To illustrate how the fee structure works, consider a transaction where the lender has a Level 1 stamp and the borrower has a Level 3 stamp. In this case, the lender is subject to a fee of 1.20%, while the borrower is subject to a fee of 0.75%. This means that Levvy collects a total of 1.95% of the loan amount in fees.
Levvy Pro: Unlocking Advanced Features for Lending and Borrowing
Users can access Levvy Pro by staking 7,500 $SOCIETY tokens, which unlocks a wider array of capabilities that extend beyond the standard offerings of the platform. The Levvy Pro service will be deactivated upon unstaking SOCIETY, and a 10% fee will be incurred and subsequently burned during this process.
Levvy Pro introduces a loan extension feature, offering staked users the flexibility to prolong the duration of their loans. This feature allows borrowers to accept new loans to repay existing ones, providing additional time without the need for extra capital. This not only adds convenience but also presents the opportunity to access new loans with better terms, thereby enhancing the overall borrowing experience.
In addition to in-platform notifications, Levvy Pro extends its communication to external reminders via email notifications. This ensures that borrowers remain updated about their loan processes, even if they forget to check the platform.
Levvy Pro also provides access to detailed statistics on loans, collections, and market dynamics. This feature is beneficial for all users, whether they are new or experienced lenders or borrowers, as it enables them to make informed decisions.
Finally, Levvy Pro users have the exclusive advantage of early access to new features before they are released to the general public. This allows them to leverage new opportunities and enhancements as soon as they become available.
In conclusion, Levvy Finance represents a significant innovation in the NFT lending market. Its unique approach of offering fixed interest rates and loan durations creates a balanced environment for both lenders and borrowers. With additional features such as Levvy Pro, the platform provides enhanced capabilities to its users. As the NFT market continues to evolve, Levvy Finance is well-positioned to contribute to the future of NFT lending within the Cardano ecosystem and beyond.