$ERSDL thread on staking math, APYs, and potential risks. This is by no means advice and is a draft of how I think about it. There’s more scenarios here but I wanted to cover some basics on the platform. I’ve broken it down into three quick scenarios. Please see thread below

Scenario 1 - supply $ERSDL and borrow $ERSDL without restating borrowed $ERSDL

The benefit here comes from the distribution APYs, which offsets the negative interest cost you incur from borrowing at a higher rate than you’re supplying

In scenario 1, liquidation risk from price movement in your collateral or borrowing is close to zero. I do NOT recommend maxing out at 80%.

Scenario 1 - to make it super simple, if the price of $ERSDL declines 50% your collateral is worth 50% less, but so is your borrowings because you borrowed in the same asset

Scenario 2 - Same as scenario 1 except you take the borrowed amount and RESTAKE it as collateral, this allows you to earn disty rewards 3x. You can see this below where we started with $100k, borrowed $50, but restaked $50k so collateral total is $150k

In my mind, scenarios 1 and 2 are the lowest risk because you can sleep knowing your collateral and borrowings move in tandem. You take in distribution APY which completely offsets any negative interest cost incurred

Now for Scenario 3 - This is the more risky scenario, amongst many, but primarily deals with COLLATERAL price risk. In this scenario, you borrow a stable coin that is constant in value but use eRSDL as collateral which can have price volatility. Risk here is high

For scenario 3, if price of eRSDL declines 50%, your borrowings stay constant at $50k and your borrowing % is 100% ($50k over $50k). We can debate whether that actually happens BUT point is there is risk and I want people fully aware of it

There are scenarios beyond number 3 which have additional risk to them, but scenario 1 and 2 work as long as the asset supplied and borrowed is the same. This allows you to effectively take advantage of beautiful distributions APYs from the eRSDL team $ERSDL

I’m still learning here but feel free to challenge or add to this thread @CryptoGodJohn @CryptoKeith_ @nickeydaystaker @TheCryptoDaddi