How we tokenized GMX positions

We had to tokenize GMX positions and make them transferable to enable borrowing against GMX positions. We have developed a group of smart contracts that allow traders to tokenize positions as ERC-721 tokens:

1. ETH-LONG

2. ETH-SHORT

Only the holder of the ERC-721 token will be able to open/edit or close the position from your trading account and make a profit.

How to borrow USDC against GMX position

You can borrow USDC against your unrealized profits if you open a position through DeDeLend interface.

1. Open DeDeLend and open a position

2. Wait until the position is in profits

3. Borrow up to 50% of unrealized profits

Liquidation

DeDeLend uses profits as collateral, meaning that in the case of liquidation, you will only lose your profits on the position but not its collateral.

Let’s imagine: we opened an ETH-LONG position at $500 (size 20 ETH), and the price increased to $1,000. Our current profits are $10,000. We borrowed 5,000 USDC from DeDeLend with a liquidation price of $800.

Later, the ETH price fell from $1,000 to $800 (-20%). DeDeLend will take the ERC-721 token to close the position. At the price of $800, profits will be $6,000.

Profits from the position will be converted in USDC and distributed according to these rules:

• Positions Collateral: 100% of the position collateral will be returned to the borrower

  The borrower will not lose their position collateral because DeDeLend allows to borrow only against unrealized profits (not the position collateral). In some cases, the borrower may lose the initial collateral if position was closed with negative PnL

• Liquidation Penalty: position profits — debt — interest fee

• LP Share: (position profits — debt — interest fee) plus 90% from the Liquidation Penalty

• Liquidator Fee: 10% from the Liquidation Penalty

Example of distribution $16,000:

• Position Collateral: $10,000 will be sent to the borrower

• Liquidation Penalty: $6,000 (position profits) — $5,000 (debt) — $50 (interest fee) = $950

• LPs share: $5,000 (principal) + $50 (interest fee) + $855 (90% from the Liquidation Penalty) = $5,905

• Liquidator Share: $95 (10% from the Liquidation Penalty)

Earn interest on DeDeLend

You can earn interest by providing USDC into DeDeLend pool (10% APR). Each loan is over-collateralized (min. 120%). When the intrinsic value of the collateral will be lower than required, DeDeLend will liquidate this position immediately.

Links

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Any of the above shouldn’t be taken as investment advice or a call to action.

DeDeLend doesn’t take any responsibility for your current or future decisions.

Our project is in beta. Use it at your own risk.

DeDeLend allows you to borrow USDC against your Hegic Options. You can open long or short ETH / BTC and use your unrealized profits as collateral.

With payoff of $14,974 you can borrow up to $7,487 (50%) → you can use this money whatever:

• Buy ETH or another coin on Uniswap

• You can trade on GMX or buy a new option on Hegic

• Or maybe you know a different place where you can earn alphaaaaa

We have integrated with Hegic, and will be integrating with GMX in the next 1-2 months. This means that you’ll be able to borrow USDC against your GMX position!

How DeDeLend works

DeDeLend uses 3 smart-contracts:

1. DeDeLend USDC Pool: LP can provide USDC into this contract to earn interest rate. from loans. All provided USDC will be used to issue overcollateralized loans.

2. DeDeLend ETH: this contract enables borrowing against ETH Hegic Options(OTM and ATM options only).

3. DeDeLend BTC: this contract enables borrowing against BTC Hegic Options(OTM and ATM options only)

Borrow process

First of all, you need to buy an ATM or OTM option on Hegic(DeDeLend works only with Arbitrum Hegic Option, we don’t support Ethereum mainnet).

1. DeDeLend allows to borrow up to 50% of the option’s intrinsic value (=difference between current price and strike price).

2. You can borrow USDC when your option is deeply in the money (4% for ETH, and 3% for BTC).

For example:

ETH CALL:Strike: $1,000 You can borrow USDC when ETH price is more than $1,040 (+4%)

ETH PUT: Strike: $1,000 You can borrow USDC when ETH price is less than $960 (-4%)

BTC CALL:Strike: $20,000 You can borrow USDC when BTC price is more than $20,600 (+3%)

BTC PUT: Strike: $20,000 You can borrow USDC when BTC price is less than $19,400 (-3%)

• Intrinsic value for the CALL option: (current price - strike price) * Amount

• Intrinsic value for the PUT option: (strike price - current price) * Amount

When your borrow limit > 0 you can click on the “Borrow” button.

1) The first step is to give DeDeLend approval to take your Hegic Option.

All options on Hegic are represented as ERC-721 tokens.

2) The second step is to lock your Hegic Option (ERC-721 token) in DeDeLend.

When you click on “Lock Collateral” the DeDeLend contract will take your Hegic Option (ERC-721 token) and lock. After this DeDeLend is the owner of your Hegic Option.

When you click on “Lock Collateral” the DeDeLend contract will take your Hegic Option (ERC-721 token) and lock. After this DeDeLend is the owner of your Hegic Option.

3) The final step is to get a borrow.

Enter the amount of USDC you would like to borrow and click on “Borrow”. After the transaction is confirmed you will receive USDC on your wallet.

Now you can use USDC anywhere: trade on GMX, buy a new option or one-click strategy on Hegic, buy a new NFT/ERC-20 token, or something else.

Repay process

1) The first step is to repay all your debt.

Click on “Repay” button and enter the amount of USDC you would like to repay. You can repay part of your loan to reduce the risk of liquidation or repay all debt. To repay all debt click on the “Max” button.

2) When your debt is zero you can get your option back.

To unlock the option click on “Unlock Collateral”. When the transaction is confirmed you will receive your Hegic Option (ERC-721 token) back to your wallet → you can exercise the option on Hegic and get profits.

Read this before you will use DeDeLend

You must repay your debt earlier than 30 minutes before the expiration date. In case you didn’t repay the option earlier than 30 minutes before the expiration date DeDeLend will exercise this option automatically and takes all profits. You don’t get anything.

All profits from the option will be sent to the LP (principal + fees) and the rest part of the profits will be sent to a liquidator.

How to earn the interest rate on DeDeLend as LP

All LPs accrue 100% of the interest rate generated by borrowers(Current Supply APY 10%). Each loan is overcollateralized (minimum 120%).We are monitoring all active loans and liquidating them when the collateralization ratio is < 120%. This helps us maintain sufficient collateralization for each loan.

How liquidation works

Our open-sourced liquidation bots are written in Python and Go. You can launch your own bot and earn USDC rewards by monitoring borrows and liquidating them when needed.

Security

We would like to remind you that our contracts are not audited and are not insured. Furthermore, we are not responsible for any bugs or exploits and are unable to cover any losses incurred. We appreciate your patience and trust in DeDeLend; however please keep these factors in mind when using our platform.

DeDeLend team doesn't have access to the users funds and collateral. Our contracts are immutable and we don't have any root access. DeDeLend is an open-source project and anyone can audit our smart contracts.

Try DeDeLend now

https://dedelend.co/

None of the above should be taken as investment advice or a call to action. DeDeLend doesn’t take any responsibility for your current or future decisions.

Our project is in beta use it at your own risk.

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