How to Loan Farm?
To help you visualise and understand how the whole Loan Farming process will look like we have prepared this infographic and short explanation of the process, step by step. In the near future we will provide you with a specific manual for Loan Farming, describing exactly how to take out a loan through the protocol.
Start off by purchasing Real Property Tokens (RPTs) for the real estate you will want to use for the Loan Farm. Check the relevant LTV (percentage of RPT value that will turn into your loan in $UST). You are able to purchase RPT’s through fundraising or in the secondary market.
The power to vote lies with the property-token holders. It is up to the owners to decide whether to take out a loan against the property or not. 51% is the number to aim for here. RPT’s traded on the secondary market may already have the underlying property asset involved in a loan (ie. Loan Farming is already available).
Start off by using the calculator to get an idea of how much you want to invest, and how much return you can expect. Here you will find how many Real Property Tokens (RPTs) and TLANDs you will require. This will slightly depend on what tier you would like to use, as the $TLAND requirement is different for each. Make sure you have the required Real Property Tokens (RPTs) and TLANDs in your wallet. We suggest having slightly more TLANDs than necessary, as the price of TLAND changes continuously. You will also need some UST to cover transaction costs.
Take out loan
Go to the loan farming tab on our website, make sure you are logged-in and have your wallet connected, and select the relevant property you want to collateralise and get a loan on. Select how many RPTs you would like to lock-in, select your tier, and then ensure you have the amount of TLANDs it will require. Once everything checks out, take out the loan!
Once the loan is taken out and the relevant smart contract has finished its process, you will find your loan (in $UST) in your wallet. Use these funds to your liking.
For example: Deposit your loan funds into Anchor EARN at around 19% APY (at the time of writing)
Deposited Funds Cooking-Up
While your loan is working, your RPTs and TLANDs in the smart contract are hard at work too! Real Property Tokens are still earning your Net Rent Income. You are also earning staking rewards on the loan amount (up to 50% at tier 3). Watch your loan interest grow at a low rate of 6% from the loan amount (at tier 3). Still, this amount is heavily outweighed by the reward alone!
[Quick maths quiz: 50% reward — 6% interest = ?]
Your patience has been rewarded, you earned on your loan (estimated return), you earned for taking a loan (reward), and you earned for owning property tokens (property yield). Now is the time to repay your loan. Go to the loan farming tab on our platform and go to “repay loan.” Repay the prompted amount in $UST and that’s that! The smart contract, once it has finished processing your request, will unlock your Real Property Tokens and $TLAND tokens and release them to your wallet.
Reinvest? Cash in? Up to you.