How you can earn high yield on unsecured USDC lending with Ribbon Lend

Ribbon Finance has launched a new product called Ribbon Lend — allowing institutions to borrow funds from the platform without having to lock in collateral — currently, more than US$17m of deposits have been added to Ribbon Lend.

The new platform allows depositors to lend money unsecured to high quality institutions like Wintermute and Folkvang, who may use these deposits to conduct market making operations or delta neutral trades.

Ribbon Lend allows depositors to earn a high yield — typical for unsecured lending — if you’re willing to take the risk to lend under-collateralized to these institutions while being credit reviewed by Credora, a relatively well-known credit rating firm.

The annualized percentage yield for loaning out USDC to Folkvang and Wintermute is currently between 4.6%$ and 13.5% — higher than most decentralized lending platforms like Aave and Compound, which are currently offering 1% APY on stablecoin lending.

The difference however, is mainly because lending on Aave is over-collateralised, meaning collateral can be seized and sold if the debt is unpaid or if the margin gets too dangerous — this protects depositors. However, borrowers might find it extremely capital inefficient as they have to lock in large amounts of collateral…