Collar is a decentralized lending protocol that hedges pegged cryptoassets.

Key Features

  • 100% LTV β€” no over-collateralization
  • No liquidations β€” borrowers always retain access to their collateral during the loan term
  • Protection against de-pegs β€” loans act as insurance against the de-peg of both the asset deposited and the one borrowed
  • Fixed interest rates β€” interest is paid up-front so there is no need to worry about accruing debt or rate swings
  • Fixed term loans β€” every loan has a fixed due date
  • No frozen assets β€” lenders do not withdraw their assets from a pool that can become over-utilized
  • Oracle free β€” Collar has no reliance on price feeds due to the absence of liquidations
You can learn more about how Collar works on the Collar core protocol Mechanism page.

Main Use Cases

  • Risk-free stablecoin swap
For an investor using their stablecoins to generate yield, Collar hedges against the risks present when pursuing high-yield strategies. Suppose you are an investor whose favored stablecoin portfolio consists primarily of DAI, but you discover that you can increase your returns by farming protocols that require USDT. If you trade your DAI for USDT, then you are exposing yourself to the systemic risks of USDT. Collar allows you to borrow USDT using DAI as collateral, and then get back your DAI at any time without having to worry about liquidations before the end of the loan term.
For a lending aggregator, Collar is a fixed cost, easy to integrate solution for maintaining a position when your farming strategy changes with no risk of liquidation. This decreases exposure to price volatility risks.
For an investor simply looking to protect their stablecoin portfolio, Collar is a way to do so. You can pay a fixed interest rate to borrow an alternative stablecoin, and if your stablecoin de-pegs then you can default your loan with no penalty.
  • Temporary de-peg loss protection
If you hold an already de-pegged stablecoin and don't want to realize the temporary loss by selling, but you also need liquidity (such as needing to meet a margin call), then you can use your asset to borrow. By having no requirement for over-collateralization, Collar allows you to maximize the assets you receive. On the other side, those who have confidence in the peg returning and are not concerned about short-term volatility can profitably lend with Collar.
  • Stablecoin bridging
Collar can play a role in bridging between stablecoin protocols. For example, it's easy to use Maker and Collar in series in order to use ETH to mint USDC instead of DAI. Using other lending protocols to complete this task would introduce liquidation risk.

How to Use Collar

Non-technical users can interact with the Collar protocol by using our app interface.
Developers can create applications that interact with the Collar smart contracts. You can see those smart contracts on our Github.

Join us

Meet us on Discord, follow our Twitter, and check out our code on Github.
Last modified 1yr ago