Thread by @RiddlerDeFi

Collaterals are an important piece of #DeFi, but there are few options available

You're either subject to depreciating assets or volatile ones with high risks of liquidations ☠️

@landxfinance is bringing an alternative 👇🧵

@landxfinance 1/

TL;DR

@landxfinance is bringing an alternative to the current collaterals in the crypto scene 💰

Their tokens can be an interesting choice detached from crypto and stock prices

This thread explores the Whys and the Pros of agricultural commodities on-chain ⛓️

@landxfinance 2/

What I'll cover in this thread:

▶️ Collaterals in #DeFi
▶️ @landxfinance's xTokens
▶️ Pros and Cons of agricultural commodities

@landxfinance 3/

▶️ Collaterals in #DeFi

Let's take a look at the collateral's situation in DeFi

The first form of collateral on-chain is of course crypto assets like $ETH or $WBTC

The downsides for this kind of collateral are pretty self-evident 👇

High Volatility ☠️

@landxfinance 4/

During bull markets, being exposed to crypto bring back lots of profits 🤑

During bear markets and recessions, it's not as good

High volatility and violent downward movements can cause massive liquidation cascades 📉

@landxfinance 5/

Collaterals quickly losing value cause liquidations, this further drops the price and causes more liquidations, and so on in loop 🔁

For this reason, an alternative to crypto collaterals is using stablecoins

They aren't perfect either 👇

@landxfinance 6/

Stablecoins present 2 risks:

➡️ Depeg
➡️ Inflation

While the first risk is minimized by using battle-tested stables like $USDC, the inflationary nature of FIAT currencies is unavoidable

@landxfinance 7/

When using stablecoins as collateral, we're exposing ourselves to a forever-depreciating currency 📉

A third way is using synthetic assets on-chain 💎

But these are rare and offer little liquidity for an ever-growing Defi

@landxfinance 8/

So, we either take a permanent inflationary loss or expose ourselves to high liquidation risks 📉

For this reason, @MakerDAO is thinking about backing $DAI with a % of stocks and bonds

Though is not certain how they will bring them on-chain ⛓️

@landxfinance @MakerDAO 9/

There's an alternative created by @landxfinance for this collateral problem 👇

It's using commodities on-chain as collateral

More specifically, agricultural commodities are the best to hedge against bearish market segments 🌽

@landxfinance @MakerDAO 10/

Enter @landxfinance 💎

$LANDX tokenizes agricultural commodities with actual physical products and brings them on-chain

#RWA (Real World Asset) is the collateral they can provide🌽

I've talked in more detail about this protocol in this thread 👇

https://twitter.com/RiddlerDeFi/status/1616121060298047489

@landxfinance @MakerDAO 11/

▶️ $LANDX's xTokens

There are 5 xTokens:

🌽 xCorn
🍞 xWheat
🥛 xSoy
🌾 xRice

🧺 xBasket, the index that covers all of them

But how are they good for the collateral problem?

@landxfinance @MakerDAO 12/

Agricultural commodities have been proven to be the best hedge against inflation and recessions

When bad times come, their prices usually rise along with inflation, and their demand can even outgrow it 📈

People will still need to eat, no matter what 🍞

@landxfinance @MakerDAO 13/

These assets are decoupled from crypto and stock prices movement 💹

Differentiating between the various crypto doesn't really work because most of them follow $BTC and $ETH movements

Actual differentiation is now available on-chain ⛓️

@landxfinance @MakerDAO 14/

xTokens can work as "dry powder" in all types of markets

They can be exchanged for other assets at any time 💱

Going back to bull markets, there's no problem in turning them back to crypto

On top of that, they provide a fixed yield 💸

@landxfinance @MakerDAO 15/

To sum it up, xTokens are

▪️ Not pegged to FIAT
▪️ Not extremely volatile
▪️ Detached from Crypto and stock movements
▪️ Exposed to actual #RWAs in high demand
▪️ 100% decentralized and on-chain
▪️ Liquid and exchangeable at any moment

@landxfinance @MakerDAO 16/

▶️ Pros and Cons of agricultural commodities

Let's make a big recap and check the true advantages of xTokens:

1️⃣ They are decentralized and fully on-chain
2️⃣ They aren't very volatile and generally rise in the long term

@landxfinance @MakerDAO 17/

3️⃣ They perform well in bad markets and rise with inflation
4️⃣ They provide a safer liquidation threshold
5️⃣ They're backed by RWAs in high demand

Regarding the Cons, There are two main ones 👇

@landxfinance @MakerDAO 18/

🔹 Price of the underlying and token might go down 📉

A good strategy to hedge against this risk is by using other collaterals as well, adding crypto and stables to the mix

Claiming the yield generated by the xTokens also covers part of this problem 💰

@landxfinance @MakerDAO 19/

🔹 In a bull market you won't gain the same way you would with crypto assets 📈

But this is adjustable by using xTokens as dry powder 💰

Being exchangeable at any time, they're good for DCA during rising markets just the way stables are

@landxfinance @MakerDAO 20/

Links 🌐

Twitter: @landxfinance
Discord: testnet.landx.fi/discord
Medium: medium.com/@landxfinance
Docs: landx.gitbook.io/landx
Linktree: linktr.ee/landxfinance
Site 👇
landx.fi

@landxfinance @MakerDAO That was it for this thread 🧵

You know the drill 🫡

Follow me @RiddlerDeFi for more alpha 🧠 

Best way to support is to simply drop a RT + LIKE on the #1 tweet of this thread 🖤

https://twitter.com/RiddlerDeFi/status/1624060890155712512