if you look here you can see usdt which is tether is offering a pretty decent deal and then you can also see that ethereum is offering quite a low rate this is because tether is a stable coin and it won't move much in price but ethereum is very volatile at the moment so with lending comes borrowing and so how this works is you lend your crypto to ave and they pay you interest on it we won't get into the technicals of how that actually works though however with lending comes borrowing so after you deposit some of your crypto to ave to earn interest you can also decide to borrow against it let's move on to over collateralized loans whenever you borrowed the NUMBER_TOKEN of your house to make payments on it the house was collateral this means if you couldn't pay the loan back the bank would just kick you out and take your house in short you gave them collateral that they can take if you don't pay well crypto loans don't necessarily work like this if you want to borrow crypto you have to be over collateralized this means if you want to borrow a hundred dollars you must give the bank NUMBER_TOKEN dollars for most people you might think this is crazy why in the world would you give someone more money than you want to borrow especially if you already have that money well imagine this if i gave you a hundred dollars worth of ethereum and you lent me NUMBER_TOKEN worth of tether which is a stable coin pegged to the us dollar you use that NUMBER_TOKEN for a few months and then you decide to pay it back and get your eth well by then ethereum has doubled in price and so you cash out your NUMBER_TOKEN of ethereum but you actually get two hundred dollars worth of value because ethereum raised in price this is a double-edged sword though because ave has something called a liquidation threshold where they will automatically sell your collateral to cover the loan that you have created this way investors never lose money let me use an example so you put up a hundred dollars of ethereum and what is called the maximum loan to value of ethereum is eighty percent which means you can borrow eighty percent of that hundred dollars so you decide to borrow NUMBER_TOKEN dollars of tether well if that ethereum price drops to more than NUMBER_TOKEN and a half percent of its value which is the liquidation percentage ave will automatically take your ethereum and pay back the lender however you get to keep that NUMBER_TOKEN that you borrowed speaking of loans we were actually wondering if you wouldn't mind giving us a loan of one like you can have it back later but right now we really need likes so that we can grow this channel and that our hard work is rewarded sound good let's move on to the next topic using ave you can create a very leveraged position which is essentially borrowing on steroids and to understand this we're gonna go over an example really quick so let's say you have a hundred dollars of ethereum you deposit your ethereum to ave and withdraw eighty dollars worth of usdc which is an ethereum stable token you take that NUMBER_TOKEN dollars worth of usdc go over to uni swap and then trade it out for more ethereum which you then go back to ave and deposit so now you've deposited NUMBER_TOKEN of ethereum but you can still take out eighty percent of
START_INTERACTION_TOKEN actually wondering if you wouldn't mind giving us a loan of one like you can have it back later but right now we really need likes so that we can grow this channel and that our hard work is rewarded sound good let's move on to the next topic END_INTERACTION_TOKEN