🏦Lending: leveraged exposure

Zona's lending platform allow users to deposit and borrow Index Tokens, allowing them to achieve leveraged long or short exposure to real estate prices. All Index Tokens will be available as both supply-side and borrow-side markets, in addition to USDT, USDC, WETH, and others. Maximum Loan-to-Value (LTV) ratios will differ per asset based on volatility and liquidity.

What are some example use-cases?

1. Leveraged long: Users can deposit Index Tokens of a certain city as collateral, borrow stablecoins, use stablecoins to purchase additional Index Tokens, deposit them, and repeat. This looping mechanism functions as a leveraged long on the real estate prices of the relevant city, allowing users to earn increased profits if the index value rises.

2. Leveraged short: Users can deposit stablecoins as collateral, borrow Index Tokens of a certain city, use Index Tokens to purchase additional stablecoins, deposit them, and repeat. This looping mechanism functions as a leveraged short on the real estate prices of the relevant city, allowing users to earn increased profits if the index value falls.

3. Pair trade: Users can deposit City A Index Tokens as collateral, borrow City B Index Tokens, use City B Index Tokens to purchase additional City A Index Tokens, deposit them, and repeat. This pair trade mechanism allow users to profit if the index value of City A rises while that of City B falls.

4. Non-real estate exposure: In addition to Index Tokens, Zona's lending product will also support other assets such as USDT, USDC, WETH, and others. If users only want exposure to crypto assets, Zona's lending platform is also able to function as other regular lending platforms do.