The majority of us have trouble getting a loan, are tired of contacting bank personnel to understand the loan process, and often devastated by the gruesome amount of paperwork that comes all together. If you want an interest free loan, the entire loan procedure becomes even more tiresome.
What if I told you about dapps that help to secure a loan quickly and easily, with no paperwork? You only need to connect with the dapp and provide Ethereum as collateral to obtain an interest free loan. It appears to be too wonderful to be true!!
Don’t worry, I’ll explain you how to go to the tree where you can harvest some bucks.
Before I begin, please understand that nothing in this post should be construed as financial advice; I am not qualified to provide such advice, and everything presented here is simply knowledge to share. Do your own research before investing in anything, and get professional financial counsel if necessary.
Let me just explain you Sturdy Finance, a solid financial institution that provides this service to everybody in the world.
What is Sturdy?
To say it simply Sturdy is a DeFi lending protocol that enables users to earn high stablecoin yields or take out interest free loans.
Today I am going to talk about interest free loans, and how Sturdy finance is able to provide them.
What are Interest Free Loans?
It’s straightforward and self-explanatory; they’re just basic loans that you can take out without paying interest. You still don’t believe me….!!
Let’s just see how Sturdy provides them.
We all know that on all the existing lending protocols, the interest earned by lenders comes from borrowers. As a result, in order for lenders to make more money, borrowers must pay higher interest rates. Sturdy, on the other hand, employs a unique approach in which the yield is derived from the borrowers’ collateral.
When borrowers provide a token as collateral, Sturdy converts it into an interest-bearing token (ibToken) using protocols like Yearn or Lido. Over time, these ibTokens accrue yield; the yield from these tokens are then distributed to lenders in the same token they deposited.
To better understand this scenario let’s call Alice and Bob:
- Alice deposits 100 USDC to the protocol.
- Bob provides .05 ETH as collateral and takes out the 100 USDC Alice has deposited as a loan.
- Over time, Bob’s debt remains constant and Alice’s balance grows as ETH earned on Lido or Yearn from Bob’s collateral is swapped with USDC and added to Alice’s account.
I hope this has given you a better understanding of how an Interest-free loan works on lending protocols.
How To Take an Interest Free Loan On Sturdy?
You can take an Interest Free Loan on Sturdy with steps mentioned below. However, before you do that let me tell you a few things first.
Sturdy finance is currently on the Ethereum and Fantom chain and you can only deposit or borrow stablecoins on it. It supports Metamask wallet, and that’s what I’ll be using to explain the steps :
- Select the collateral you would like to supply and click on the Provide button.
- Input the amount then click Continue and sign the transaction on your Metamask.
- Check the deposit overview and click on the Deposit button.
- Proceed to deposit and sign in the transaction in Metamask.
- Choose the assets you would like to borrow, and click on the Borrow button.
- Input the amount you would like to borrow, and sign the transaction on your Metamask.
- Check the borrow overview and health factor, and click Borrow.
- Proceed borrowing and sign in the transaction in Metamask.
That’s it. It’s done! Pretty much simple and easy. But be cautious because a wrong click would cost you dearly.
Also Read: Why you should take a Cryptocurrency Loan?
