What is Structured Loan?
Structured Financing gathers hedging and fundraising to meet various capital needs. It has the following features:
- Loan USDT at a low cost
- High Loan-to-Value Ratio (60%-80%), achieve highly efficient fund financing
- Built-in protected mechanism for a price drop (no margin calls, dramatically reduce liquidity risk)
Examples of Structured Loan
For example, right now the price of BTC is $20,000. a user would like to use 10 BTC as collateral to loan $140,000 with Structured Loan. He decides to loan with a 70% Loan-to-Value Ratio, 120% Profit Sharing Level, 30% Profit Sharing Ratio (Users keep 70% of the profit), 4% APR and 3 days duration.
When the term starts, the profit-sharing price would be $24,000, downside protection price would be $14,000. The user can raise $140,000 using 10 BTC as collateral. There are 4 scenarios with different prices at settlement:
Scenario 1: At settlement, the price is still $20,000, the borrower will pay 46 USDT.
Scenario 2: At settlement, the price is greater than profit sharing price ($24,000), such as $24,500. The borrower will pay 46 USDT and extra 1,500 USDT. Profit Sharing: (24,500-24,000) * 10 * 30% = 1,500)
Scenario 3: At settlement, the price is between profit sharing price ($24,000) and downside protection price ($14,000), such as $15,000, the borrower will pay 46 USDT.
Scenario 4: At settlement, the price is below downside protection price ($14,000), such as $13,000, the borrower will pay 46 USDT and receive 10,000 USDT as downside compensation from the lender. No margin call is required in the entire process.
How to Use Structured Loan to Make Money
Generate Cash Flow
Holding BTC and need cash flow in the current state. One can use their BTC holdings as collateral to borrow 70% worth of USDT.
Pros: Avoid selling BTC at a low price; keep the profit of price rising in the future. If the price of BTC keeps dropping, even dropping out of the downside protection level, no margin call is required.
Dip-Buying + Leveraging + Downside Compensation
Scenario 1｜Holding USDT, would like to buy BTC or ETH on the dip
Convert all USDT into ETH, use ETH as collateral to raise 70% worth of it in USDT to buy ETH at the dip.
Pros: Leverage trading BTC/ETH with downside compensation
Scenario 2｜Holding USDT, would like to buy Altcoin on the dip
Convert all USDT into Dot. Then use DOT as collateral to receive 70% of its value in USDT and use it to buy DOT on the dip.
Pros: Leverage trading Altcoin with downside compensation
Scenario 3｜Holding BTC, Buy Altcoin on the dip
Convert all USDT into BTC. Then use BTC as collateral to receive 70% of its value in USDT and wait to buy Altcoin on the dip.
Pros: Users can buy Altcoin with no need to sell their BTC. They can earn extra price increases with downside compensation.
Q: The settlement time is always 16:00 (UTC+8) in the system. Can I determine my own settlement time?
A: You cannot determine your own settlement time. Structured finance product always settles at 16:00 (UTC+8).