Indirect Liquidity Providing

Crypto holders looking to generate simple passive income can deposit crypto assets in their Securd Savings Account and become Indirect Liquidity Providers.

These deposits, grouped by asset in Lending Pools, are used to grant loans to Liquidity Providers. The loan interest paid by Liquidity Providers (Borrowers) generates revenues in the Depositors' Savings Balance.

Like most lending protocols, Securd protects deposits from repayment defaults by requiring Borrowers to lock assets in the Collateral Pool. The key difference is that Securd uses a very efficient collateral: LP Tokens. These LP Tokens represent the Borrower share of a DEX liquidity pool and can be redeem for a certain quantity of the original tokens.

In order to cover for repayment at any point in time, the ratio between the collateral value and the related loans value, called Collateral Factor or CF, should be maintained above a certain value, called Liquidation Threshold or LT (defined by the Collateral Model and always above 100%).

If the Collateral Factor reaches the Liquidation Threshold, Securd will seize the Borrower's collateral and sell it to a Liquidator. The sale proceeds will be used to pay back the related loans. This liquidation mechanism offers a strong capital protection to Depositors.