Earn explained

Details About the Earn Lending Product

The Earn Lending Product is designed to generate yield on various digital assets by lending them to some of the most reputable market makers in the cryptocurrency industry. These market makers utilize the borrowed funds to provide essential liquidity on major exchanges such as Binance and Coinbase.

How It Works:

• Loan Arrangement: Users enter into a loan with Valos under the applicable legal terms and transfer their assets to Valos as part of the lending process. Valos subsequently enters into separate lending agreements in its own name with select market makers, lending the assets to these market makers.

• Liquidity Provision: The market makers deploy the borrowed assets to populate the order books of exchanges, ensuring that the bid and ask prices are closer to the actual market value of the assets. This activity enhances price efficiency and reduces slippage, resulting in a more seamless trading experience for users of the exchanges.

• Market Making Strategies: The market makers employ sophisticated algorithms to determine the fair price of assets. They quote prices on both sides of the market—buy and sell—profiting from the spread between these quotes. The algorithms they use are designed to react to market conditions in real-time, ensuring that prices remain competitive and reflective of true market values.

• Enhanced Market Liquidity: By lending assets to these market makers, the overall liquidity of the cryptocurrency market is significantly improved. This enhanced liquidity benefits all market participants by providing tighter spreads, better pricing, and a more stable trading environment. Without this provision of liquidity, market conditions could deteriorate, leading to wider spreads, greater slippage, and potentially adverse trading outcomes for users.

• Yield Generation: In return for the assets used in their market-making activities, the market makers pay monthly interest to Valos. This interest is used by Valos to pay interest to users of the Earn Lending Product on their loans.

Benefits:

• Optimized Yields: Users earn competitive yields on their assets without needing to actively trade or manage them.

• Market Efficiency: By supporting market makers, users indirectly contribute to more efficient and fair markets, benefiting all participants.

• Security and Oversight: Continuous monitoring and rigorous borrower assessments ensure that the product is both secure and reliable.