How to Create a Loan that Pays for Itself on Polygon
Aave is one of the most popular lending platforms on Ethereum and Polygon. Using Aave you can safely deposit collateral for others to borrow, and gain fees based on their borrowing.
Aave deposits and the problem of compounding rewards
Currently, Aave on Polygon rewards depositors with additional MATIC rewards as an incentive for depositing their collateral for borrowers to use.
Unfortunately, those rewards must be claimed and swapped to compound them back into Aave… until today! The Qi DAO now will compound those for you. Using amTokens (Aave market tokens) that you gain when depositing collateral to Aave, you can deposit on Mai.finance for camTokens that automatically compound your Aave MATIC rewards back into your original deposit. (I.E. deposit USDC at Aave, receive the APR fees there for depositing, the boosted MATIC rewards they include, AND have those rewards autocompounded back into your USDC deposit. All without you doing anything!)
In the future, the Qi DAO plans on allowing these camTokens (camUSDC, camDAI, camUSDT, camWETH, and camWMATIC) to be used as collateral for minting their MAI stablecoin.
You can imagine the possibilities of leveraging stablecoins, that are accruing fees, to mint more stablecoins, to purchase stablecoins that can accrue fees…
Bullish for the Qi token and their DAO.
Why is the Qi DAO allowing this?
By compounding amTokens for users the Qi DAO is providing a new single asset autocompounder, and allowing the MASSIVE market on Aave access into the Qi DAO protocol for borrowing the stablecoin MAI. Boiling it all down?
Now you can take out a loan that pays for itself.
How do I create a camToken?
To create a camToken you’ll first need to deposit the appropriate collateral at Aave. After depositing USDC, DAI, USDT, WETH, or WMATIC you will receive amTokens representing your deposit. You can then take those over to Mai.Finance in the Yield section and deposit for camTokens. Right now the deposit is free, but there may be a fee in the future.
While your amTokens are deposited as camTokens they will grow in the pool. As mentioned earlier, there are also plans to use these camTokens as collateral for loans to mint MAI, the Qi DAO’s stablecoin. This is a HUGE development for the Polygon network and allows some incredible leverage while safely earning yield.
Where can I see the code for the camTokens?
Take a look at Qi DAO’s work and the code for camTokens here.
Do I earn Qi for depositing camTokens?
No, but you may in the future be able to mint the stablecoin MAI in the future using these tokens as collateral, which opens up the possibility of Qi farming.
Are these tokens and the contracts audited?
Not yet, but they are internally tested and an external audit is forthcoming according to the DAO. The dev. team there represents a well-respected group on Polygon and is highly trusted.
Can I deposit these amTokens at the Qi DAO if they are borrowed against at Aave?
You are not able to borrow against amTokens that already have debt assessed against them at Aave. The collateral can only serve for one loan.
Why does Aave say my deposit is empty/lower after depositing on Qi DAO?
Aave recognizes you have a deposit by looking at your wallet for amTokens. When you deposit those to the Qi DAO for camTokens Aave no longer sees your deposit. Don’t worry, you’re in possession of camTokens which are always redeemable at app.mai.finance/yield for the corresponding collateral. The smart contract handles everything and means your funds are safu!
Will removing amTokens affect my overall health on Aave?
Be careful when depositing your amTokens onto the Qi DAO. If you have a loan out to yourself on other collateral doing so will lower your overall health score at Aave. You can risk liquidation of your assets if the ratio of collateral and debt there goes too low. Should you not have any loans on your collateral and want to take out all of your amTokens to deposit for camTokens there is no danger as your Aave account health is then no longer a factor.
Want to learn more? Check out the announcement from the Qi DAO here.