While, we are waiting on a whitelist process/approval to be completed, I will post here just for record some update on our thoughts on the interest rate at this point. The summary is unless there is a significant market change - we will need to apply with a higher rate than proposed (probably a “duh” statement). Personally, I have always been fascinated with the process of price discovery. We are juggling number internally.
Some data points:
AAVE rates:
The average of the current rates across the stable coins, USDT, USDC, TUSD, and BUSD is around 13.5% on the margin (in time). Longer term for the two largest stablecoins USDT and USDC is 10.75% over 30 days. Similarly, Y Curve has exhibited similar rates, where the current rate is 16% vs. longer rates I would guess is around 10-12% before CRV rewards. Other protocols are offering even higher yields.
So, the “overnight rate” we then estimate 14.75% - and longer term is 10.5% at least looking back 30 days. By depositing in these, likely, a lender still takes hold of collateral. So how much is uncollateralized lending worth? Materially more.
Lets consider the reference simply to be the average of the two rates 14.75% and 10.5% which by no means in scientific - but this is 12.625%.
What is the traditional finance ratio for secured and unsecured finance?
LQD (Unsecured Mostly Corporate Debt) Dividend Yield: 2.67%
MBB (Agency Mortgage Backed - Collateralized and Gteed) Dividend Yield: 2.05%
HYG (High Yield Corproate Debt): 4.80%
Clearly, there should be a premium to unsecured loans.
Here are some data points above to consider - but really leave the stakers to decide of course.