Struggling to understand everything about @HatomProtocol?
Here's your ultimate alpha-packed guide to mastering the protocol in record time!
@pulsarmoney send 500000 MEX to the first 300 retweets.
๐งต ๐
Let me clarify a few things before we start!
@HatomProtocol is not a DEX!
Depositing funds into the protocol doesn't posses any risk to IL.
You won't find farms inside the protocol.
@HatomProtocol is a lending and borrowing protocol and liquid staking provider.
What's this?
๐น๐๐ฒ๐ป๐ฑ๐ถ๐ป๐ด ๐ฎ๐ป๐ฑ ๐ฏ๐ผ๐ฟ๐ฟ๐ผ๐๐ถ๐ป๐ด ๐ฝ๐ฟ๐ผ๐๐ผ๐ฐ๐ผ๐น
Lending protocols operate by employing smart contracts that automatically oversee and carry out loan contracts.
These smart contracts make it possible for users to directly lend to and borrow from each other.
Lenders place their assets into the protocol and these assets can subsequently be borrowed by other users.
In order to borrow, these users must provide collateral, more than the amount they are borrowing, as a safeguard against possible price fluctuations.
Lenders are getting paid to supply their funds in @HatomProtocol pools; the interest comes from the borrowers.
Borrowers are paying to borrow funds from these pools; most of the interest is paid to lenders, while @HatomProtocol takes a part of that interest.
Quite simple,right?
The interest rate it's not fixed and it changes based on the utilization rate inside the lending protocol.
Here is an explanation of how the interest rates are working ๐
twitter.com/robolteanu/status/1684221197943451648
Similar lending and borrowing protocols on other chains?
โผ @AaveAave ( multi-chain )
โผ @compoundfinance ( multi-chain )
โผ @VenusProtocol ( BSC )
โผ @BenqiFinance ( @avax )
๐น ๐๐ถ๐พ๐๐ถ๐ฑ ๐ฆ๐๐ฎ๐ธ๐ถ๐ป๐ด ๐ฃ๐ฟ๐ผ๐๐ถ๐ฑ๐ฒ๐ฟ
@HatomProtocol provides a solution for traditional staking where a user needs to lock funds to secure the network and receive additional rewards.
The problem is that once they are locked, the user has no access to those funds.
By using liquid staking, a user can participate in securing the network while maintaining liquidity.
This is made possible by providing the user a receipt token when he proceeds to stake the funds.
In this case, when a user stakes $EGLD, he will receive $sEGLD in exchange.
$sEGLD is an interest-bearing token that grows in value based on the staking rewards.
Basically, the rewards are injected back into the $sEGLD and its price will always be higher than $EGLD.
The value of $sEGLD increases algorithmically based on the liquid staking APY.
Here are the two modules that you must understand.
It's simpler than it looks and you can imagine it this way :
โผ Lending Protocol = a bank where users can lend and borrow;
โผ Liquid Staking Module = maintain liquidity while earning staking interest.
While using @HatomProtocol you will come across another token, namely $HsEGLD.
What you need to know there is that when you supply a token inside the lending protocol, you also receive a receipt token ( HTokens ).
As the name shows, $HsEGLD is $sEGLD supplied in the protocol.
This token will earn interest from both staking and supply.
Here is a more in-depth explanation of both $sEGLD and $HsEGLD ๐
twitter.com/robolteanu/status/1676906624546471936
Similar protocols that are offering liquid staking on other chains?
โผ @LidoFinance ( multi-chain )
โผ @Rocket_Pool ( $ETH )
โผ @MarinadeFinance ( $SOL )
โผ @stride_zone ( $ATOM )
Now, let's move to the most interesting part.
How do you make money with @HatomProtocol?
It's actually easy and it doesn't possess any risk other than smart contract risk ( well, it's DeFi, that's the norm ).
So let's delve into different ways to make some profit!
1๏ธโฃ. ๐ฆ๐๐ฎ๐ธ๐ฒ $๐๐๐๐ ๐ถ๐ป ๐๐ต๐ฒ ๐น๐ถ๐พ๐๐ถ๐ฑ ๐๐๐ฎ๐ธ๐ถ๐ป๐ด ๐บ๐ผ๐ฑ๐๐น๐ฒ
Yep, I know, it sounds easy; well, it is!
By supplying your $EGLD into liquid staking, you earn the staking APY ( 6.35% ) and you will receive $sEGLD which can be used in other DeFi strategies.
How do you do that?
Extremely simple, just a few clicks!
First, head over to this link: app.hatom.com/liquid
Now, follow this video ๐ ( I'm using devnet, not important ).
๐๐ฟ๐ฒ ๐๐ต๐ฒ๐ฟ๐ฒ ๐ฎ๐ป๐ ๐ฟ๐ถ๐๐ธ๐?
As I said above, there is a risk of smart contracts being hacked.
Can this really happen?
Sure, but the team spend over $2m for multiple audits and penetration tests.
And guess what?
It's actually the most audited protocol on #MultiversX.
2๏ธโฃ. ๐ฆ๐๐ฝ๐ฝ๐น๐ ๐๐๐๐ฒ๐๐ ๐๐ผ ๐๐ต๐ฒ ๐๐ฒ๐ป๐ฑ๐ถ๐ป๐ด ๐ฃ๐ฟ๐ผ๐๐ผ๐ฐ๐ผ๐น
That's the beauty of a lending protocol, you can earn yield without any kind of impermanent loss.
You are not creating an LP nor depositing into a farm.
You simply supply and receive yield.
๐๐ฒ๐ ๐ง๐ต๐ถ๐ป๐ด๐ ๐๐ผ ๐จ๐ป๐ฑ๐ฒ๐ฟ๐๐๐ฎ๐ป๐ฑ ๐ ๐ง
โผ The APY that you see in there ( 10.45% on $EGLD, 10.60% on $USDC, and so on ) is received only if you activate your tokens as collateral.
Don't worry, I will explain to you later what collateral means.
How do you activate your assets as collateral?
It's super simple.
This video should help you!
You can do the same interaction with any of your coins in order to receive the displayed APY.
If you don't activate your assets as collateral, you will only earn supply interest that comes from people that are borrowing the funds.
This APY is calculated based on the utilization rates inside the protocol.
A higher utilization rate will translate in higher APY.
As you can see, a Net APY of 10.46% on $EGLD consists of 2.78% supply APY paid by borrowers + 7.685% APY paid by Hatom itself in additional rewards.
Wait a minute, where are the rewards coming from?
โผ Rewards Are Not Printed From Thin Air
@HatomProtocol is offering $3m in incentives for an entire year.
Read more about it here ๐
twitter.com/HatomProtocol/status/1676531570230849539
The rewards are not distributed in $HTM, therefore there is no liquidity mining program for $HTM
All the additional rewards are being distributed in $USDC at the moment
No impermanent loss, no farming, no selling pressure, nada!
Just supply!
โผ You can't be liquidated if you don't take a loan ( will cover this immediately ).
Liquidation occurs only when you take a loan against your collateral.
If you simply activate your assets as collateral without taking a loan, you are not subject to liquidation, period!
๐๐ฟ๐ฒ ๐๐ต๐ฒ๐ฟ๐ฒ ๐ฎ๐ป๐ ๐ฟ๐ถ๐๐ธ๐?
Same as liquid staking, only smart contract risk.
But what if all the assets will be borrowed from the protocol and I can't withdraw my assets?
You need to understand that a protocol like @HatomProtocol is using over-collateralized loans.
Over-collateralized loans are loans in which the value of the collateral that the borrower pledges is greater than the amount of money they're borrowing.
For example, if someone wants to borrow $80, they might have to provide collateral worth $100.
When the utilization rate of the funds is high, the increase in APY will force the borrowers to pay the funds.
The APY for supply will also be high and will incentivize users to take advantage of the rates and supply more.
The system is designed to always reach an equilibrium.
3๏ธโฃ. ๐ ๐ฎ๐ธ๐ฒ ๐ฃ๐ฟ๐ผ๐ณ๐ถ๐ ๐ง๐ต๐ฟ๐ผ๐๐ด๐ต ๐๐ถ๐ณ๐ณ๐ฒ๐ฟ๐ฒ๐ป๐ ๐ฆ๐๐ฟ๐ฎ๐๐ฒ๐ด๐ถ๐ฒ๐
The above steps are mostly risk-free, as I already mentioned.
I already posted a few strategies for the community, so we will just include them here again.
These are a bit more risky tho.
โผ Trade the Price Movement of an Asset
Here's a guide on how to open long and short positions using @HatomProtocol.
Please make sure you understand the risks, if the price goes against you, then you will be in a position to be liquidated.
twitter.com/robolteanu/status/1678458119922536448
โผ Leveraged Liquid Staking
Here you can amplify the APY that you receive through a strategy called looping.
It can be an effective strategy if used correctly.
Please make sure you understand how the borrowing APY works first and what you need to be monitor.
twitter.com/robolteanu/status/1679084597953417218
If you decide to loop using $sEGLD, make sure you understand how the interest works for this $EGLD derivative.
I gave a brief explanation of it here ๐
twitter.com/robolteanu/status/1682704799647539201
3. Self-Repaying Loans
This is an interesting concept and it can be very lucrative.
Find out more about it here ๐
twitter.com/robolteanu/status/1680183958816931840
@Davyegld also worked on it and explained a few strategies when it comes to @HatomProtocol.
Feel free to have a look at them ๐
twitter.com/Davyegld/status/1679876900020441090
@AndreiMX_ made everything look better through an infographic.
For whoever likes to learn through visuals, here is your thread ๐
twitter.com/AndreiMX_/status/1679884570877992962
Some of these strategies will be subject to liquidation, as I said countless times.
I would advise you to learn how liquidation works first.
I've explained it here ๐
twitter.com/robolteanu/status/1677648426249379840
@HatomProtocol it's powerful and at the moment, quite possible that it's the best place to go and earn some interest on your assets with almost no risk.
Unfortunately, I saw that some members of the community are not really aware of what Hatom is, but here you have it now.
This thread should be enough to get you started and earn additional rewards.
There's no sketchy game, and no hidden fees, it's just a way to bootstrap the DeFi ecosystem.
It's a long thread, so thanks for reading.
This should help you understand how everything works, but if something is not clear, feel free to send me a DM.
You should all take part in this, there's nothing to be afraid.
Top-notch security and good incentives.
That's it for now, play it safe!
Don't go too crazy, feel free to leave suggestions if you want me to explain something.
Have a good one, lads! ๐