Where Is The Cheese — #2 Lend on Demex

Welcome back to our “🧀Where is the Cheese?🧀” series! Today, we’ll be delving into how milkTIA is now accepted as collateral on Demex. But first, let’s introduce Demex.

If you missed the previous inaugural post on LP-ing on Osmosis via a manual or managed strategy,👉 check it out.

Introduction to Demex

Decentralized Mercantile Exchange, or Demex, is a cross-chain platform designed to be the only DEX users need, supporting features from spot, perpetuals, and futures markets, as well as a cross-chain money market.

The DEX runs on the Carbon Chain, a purpose-built blockchain using Tendermint for consensus that is performant enough to operate the whole exchange — every order, cancel, trade, and liquidation happens transparently on-chain with block latency <1 second. The chain currently supports 20k orders/second.

Demex’s Nitron Page

Lend milkTIA on Demex

Providing your milkTIA as collateral on Nitron is a straightforward process:

1. Access Demex’s Nitron Protocol: First, navigate to the Demex platform.
2. Connect Your Wallet: Connect your wallet that holds your milkTIA tokens.
3. Deposit milkTIA: Go to the deposit page and choose to deposit milkTIA. Enter the amount you wish to deposit and confirm. This will trigger an IBC transfer to transfer your milkTIA from Osmosis over.
   💡 Tip: if you don’t have the native $SWTH to pay for gas, you can navigate to Settings and update the gas token to milkTIA, TIA, or other.
4. Start Lending: Navigate to the Nitron page, select milkTIA, enter the amount you wish to lend. Confirm and start earning interest on your loans.
   💡Tip: There is an option to enable it as collateral so you can borrow other assets.

Borrow on Demex

1. Borrow: On the same Nitron page, select the asset you wish to borrow and enter the amount.
2. Confirmation and Monitoring: Confirm the transaction. Once it’s processed, you will receive borrowed assets to freely use for other DeFi opportunities and you can monitor your position’s health status directly on Nitron.

Prevent Liquidation

To mitigate liquidation risks, it is essential to constantly monitor your health factor on the Nitron page. We highly recommend reading Demex’s guide to understand how the health factor is calculated and to comprehend the circumstances under which liquidation occurs before you begin borrowing.

To Lend or To LP

To lend or to LP, that is the question.

If you are choosing between LP-ing on Osmosis or lending on Demex, here are some pointers that might help:

1. Different Investment Strategies: Using milkTIA as collateral for lending enables you to borrow assets for various DeFi activities, allowing you to develop more sophisticated investment strategies. When you provide liquidity to a pool, you allocate your asset to that pool and earn interest through trading fees.
2. Mitigation ofImpermanent Loss: Engaging in liquidity provision on an AMM DEX involves the risk of impermanent loss, a consequence of holding two different assets. For a detailed explanation of this concept, refer to Osmosis’s article. By lending milkTIA, you expose yourself solely to one asset, thus avoiding the price discrepancies between two assets that can result in impermanent losses.

📻 Check out the Spaces we did previously with the Demex team for more information and tips!

Disclaimer: none of this is financial advice. Please do your own due diligence before participating in any of the mentioned protocols.

This wraps up the second post of the Where Is The Cheese Series.

Happy Milking! 🐄🥛