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➡️ Lending

Generate passive income by providing liquidity to borrowers on Levvy.

Overview​

Lending on Levvy allows you to earn attractive yields on your ADA while maintaining flexibility. Submit loan offers with your preferred terms and let borrowers come to you - all while keeping your ADA staked.

Key Benefits​

🎯

Passive Income

Set offers and earn without active management

💰

Staking Preserved

Keep earning staking rewards until loans are accepted

🔧

Full Control

Choose your LTV ratios and loan amounts

⚡

No Micromanagement

Perfect for large lenders seeking efficiency

Understanding LTV (Loan-to-Value)​

Critical Concept

LTV is the most important ratio in lending. We strongly advise all lenders to fully understand this concept before submitting offers.

What is LTV?​

  • Definition: The loan amount as a percentage of the asset's current value
  • Formula: LTV = (Loan Amount / Asset Value) × 100
  • Risk Correlation: Higher LTV = Higher Risk

LTV Guidelines​

Conservative (40-60%)

Lower risk, suitable for volatile assets

Moderate (60-75%)

Balanced risk/reward for stable assets

Aggressive (75%+)

Higher risk, requires close monitoring

How Lending Works​

1. ADA Staking Continues​

  • Your ADA remains staked to your pool until accepted
  • Continue earning staking rewards
  • No opportunity cost while waiting

2. Loan Acceptance​

  • When accepted, ADA is instantly sent to borrower
  • Transaction approved through Levvy smart contract
  • Your staking position transfers with the loan

3. Loan Management​

  • No predetermined expiration dates
  • Monitor asset prices as LTV changes
  • Option to foreclose on defaults

4. Repayment​

  • Receive principal + interest - fees
  • Funds returned through smart contract
  • No further obligations after repayment

Step-by-Step Lending Guide​

1

Access Platform

Visit levvy.fi and connect your wallet

2

Choose Market

Select "Tokens" or "NFTs" based on preference

3

Select Asset

Choose which token or NFT collection to lend against

4

Set Terms

Enter ADA amount and desired LTV ratio

5

Submit Offer

Sign transaction and wait for borrowers

Important Considerations​

📊 Price Monitoring​

After submitting offers:

  • Watch token prices as they affect LTV
  • Adjust offers if market conditions change
  • Consider price volatility in your LTV calculations

🎯 Asset Selection​

  • Tokens: Generally require lower LTV due to higher volatility
  • NFTs: Can support higher LTV for established collections
  • Research: Always investigate the asset before lending

💼 Portfolio Strategy​

  • Diversification: Spread loans across multiple assets
  • Partial Fills: Borrowers can take portions of your offer
  • No Matching: Don't try to match exact borrower needs

Risk Management​

🛡️ Conservative Approach

  • Lower LTV ratios (40-60%)
  • Blue-chip assets only
  • Smaller loan amounts

⚖️ Balanced Strategy

  • Moderate LTV (60-75%)
  • Mix of asset types
  • Regular monitoring

🚀 Yield Maximization

  • Higher LTV possible
  • Active management required
  • Deep market knowledge needed

Foreclosure Process​

In case of loan default:

  1. Manual Initiation: You must actively foreclose
  2. Collateral Receipt: Receive the tokens/NFTs used as collateral
  3. Market Decision: Choose to hold or sell the assets
  4. Risk Mitigation: Ensure LTV covers potential losses

Best Practices​

Pro Tips for Lenders
  1. Start Conservative: Begin with lower LTV ratios
  2. Monitor Markets: Keep track of asset price movements
  3. Diversify Offers: Spread risk across multiple loans
  4. Research Assets: Understand what you're lending against
  5. Plan for Defaults: Have a strategy for foreclosed assets
Next: Understanding Fees

Learn about the fee structure on Levvy platform.