Get Paid To Borrow and Deposit Incentives
With Pinjam's approach of 100% capital productivity, lenders can earn yield from two sources:
- 1.Borrowing activity on Pinjam
- 2.Yield Farming activity - by putting unborrowed funds to work in Pinjam Auto-Compounding Vaults that earns yield from base lending protocols such as Aave
When this happens, there will be times where Pinjam's lending APY can be HIGHER than its borrowing APY. In other words, you can be PAID to BORROW.
This is because the interest you've paid for borrowing assets is covered when you lend out those same assets on Pinjam - where you will in fact, EARN on the assets you lend.
This is happening without any token incentives - imagine the rates when we do! Let's visualize this.
Take a look at USDT on Pinjam. Lending APY is 2.63% - while borrowing APY is 1.96%.
You can borrow USDT on Pinjam and pay 1.96% for interest - but then lend that same USDT on Pinjam to EARN 2.63% yield.
It's not every day that you see this happening on lending platforms!
To help maintain our goal of achieving 100% capital productivity, we need to ensure that idle funds are constantly being put to work.
To achieve this we will be incentivizing depositors to help put idle liquidity to work and receive back the asset in exchange, essentially getting paid to deposit!
The Fee paid to depositors is 1% of the total rewards generated from the idle liquidity at work.
As an example, if there is $100 in the vault earning 10% per annum, in one year the vault will have generated $10 in rewards, $0.10 will then be paid to depositors who help to continue to put idle liquidity to work.
To put it simply, no.
A Pinjam user can only claim whatever incentives later --- from the last instance that they claimed.
For example, if there is $100 in farming rewards, the incentive would be $1 (since it's 1% of the total rewards generated from idle liquidity at work) If someone (or even a bot) claims it, the farming rewards will then decrease to $99.
You will only be able to claim accumulated farming rewards from the $99 point onwards. Assuming there's an extra $100 in farming rewards, totaling $199 in farming rewards. You will only be able to claim the incentive from that extra $100 (giving you the $1 incentive), not the $199 farming rewards in total.
What if someone deposits a huge amount to gain the incentives later? That user would have to wait for farming rewards to accumulate AND hope no one else claims the incentives by then.
What if a bot attempts to claim the farming rewards every single time?
For a bot to remain profitable doing so, it has to wait until farming rewards are at a sufficient level where the 1% incentives can at least cover its gas fees to deposit to the vault.
Not only that, the bot has to claim the incentives before anyone else --- if someone else claims it, the incentives reset again.
Even if the bot is able to claim the incentives, by depositing into the vault directly, it is ensuring that idle liquidity is being worked to generate yield.
It's a win-win situation.