The unique mechanism by which lending is implemented in the Ruler platform creates a range of interesting opportunities for market participants.
Since loans are issued when those wishing to borrow USD (or other supported cryptocurrency) sell their RC tokens into a liquidity pool, this creates a supply and demand dynamic that establishes a USD-RC “price”, or interest rate.
High borrow rates — When there is more demand for USD than RC tokens, this means there’s a high demand for loans, and the interest rate will increase. When there is positive interest rates, lenders can “sell” their USD stablecoins for RC tokens, capturing both the current borrow interest rate, and then earning the current farming yield if they choose to farm their RC tokens.
Negative borrow rates — When there is more demand for RC tokens than USD, a situation of negative borrow rates can arise. In such situations, an investor borrow USD stablecoins and immediately repay it to capture the interest rate!
Let’s now learn about who is behind the Ruler project. →