$GUARD on Knight Lending Network

An Overview Of What You Can Do & What To Look Out For

Welcome! This will be a supporting document for $GUARD specifically within the KnightSwap lending network, for a more detailed overview of the lending network or how to navigate the platform use the articles listed below.

Contents

1. Supporting Docs
2. $GUARD is only available as an asset to be supplied
3. Network Tab
4. Definitions to be aware of
5. FAQS

Supporting Docs

Lending Network Document — https://medium.com/knight-bsc-dark-knight-ftm/knight-lending-network-abb252474cf

Lending Network How To Document — https://medium.com/knight-bsc-dark-knight-ftm/knight-lending-network-c57010d8152

$GUARD is only available as an asset to be supplied

As you can see in the picture above you will not be able to borrow $GUARD. This may change in the future once we have gathered enough data.

Network Tab

Clicking on the network tab will bring up all the assets under the Knight Lending Platform, which you can use to learn more about.

Scroll down to $GUARD & click on the box it’ll show a drop down menu.

Definitions to be aware of

Red Box — Important piece to highlight is Active Collateral Cap (ACC)- $500,000. This is currently the amount of $GUARD within the entire network that can be utilized as collateral to borrow against.

Green Box — This is the Active Collateral Cap (ACC) usage which is currently at $500,552 (this price will change based on the price of the asset). When the ACC usage is the same as the ACC that means no more of the asset can be used as collateral. If the ACC Usage were $200,000 then there would be $300,000 worth of collateral for $GUARD that can be used in total for the ENTIRE network.

The ACC is something that we will be monitoring closely and can be adjusted over time depending on the performance. We will always bias safety and sustainability of the project first so we will be micro stepping into this.

Edit* As of July 4, 2022 ACC is now 1.2 million

Collateral Factor — The max amount that a user can borrow depends on the amount of collateral deposited and the token’s Collateral Factor.

The Collateral Factor — expressed as a percentage — is a multiplier used against your supplied assets.

Example

Let’s say you supply $1000 $GUARD as collateral, and $GUARD has a collateral factor of 40%. This means that you can borrow up to $400 of any token ($1000 x 40%).

Note: The amount you can borrow is based on the Collateral Factor of the asset (or assets) you are supplying. In the example above, it doesn’t matter what asset a user borrows — they supplied WBTC and it had a Collateral Factor of 70%.

Liquidation Factor — A position can get liquidated when it’s under-collateralized, meaning there is no longer enough collateral to support the amount that has been borrowed. The Liquidation Factor — expressed as a percentage — is a multiplier used to calculate the value at which these liquidations can occur.

If you deposit $GUARD which has a Liquidation Factor of 75%. This means that when the value of the borrowed position reaches 75% of the supplied $GUARD value, a liquidation can occur.

This is why we incentivize borrowing with BUSD as this reduces one source of volatility to account for (unless of course BUSD depegs from the dollar. This scenario although highly unlikely, is something to keep in the back of your mind that all stable coins do have the risk of losing their peg to the dollar. This could then expose you to a possible liquidation if you are under collateralized and over leveraged.)

FAQS

1. How do I calculate when I will get liquidated if I am providing two different assets with different liquidation factors?

You would calculate the total credit.

Let’s assume that you put 1,000$ in ETH (LF of .75) and GUARD (LF of .65)

1,000$*0.75= 750$ (ETH)

1,000$*0.65= 650$ (GUARD)

Total of 1,400$.

So when your total borrowed value hits that amount (assuming supplied value stays the same), a liquidator can choose which asset they’d like to repay (up to 50% max of your position) and which they’d like to receive in return.

2. Why am i getting “action failed do to too much collateral” error and can’t use $GUARD as collateral?

Be sure to pay attention to the ACC and the ACC usage.

3. How can the ACC usage be more than the ACC?

The assets were supplied at a lower price of $GUARD which was under the $500,000 level. As the price of $GUARD increased this now increases the value of the $GUARD tokens that have already been posted as collateral, which then increases the $ number shown by ACC usage. The increase in ACC usage is not due to new users depositing $GUARD to be borrowed as collateral. Conversely if the price of $GUARD drops this will also decrease the $ value shown on the ACC usage.

As more feedback and data come in for the lending network this document will be updated. Be sure to save this for easier reference

DISCLAIMER: These articles are for educational purposes only. Nothing in this article should be construed as financial advice or a recommendation to buy or sell any sort of security or investment. Consult with a professional financial adviser before making any financial decisions. Investing in general and options trading especially is risky and has the potential for one to lose most or all of their initial investment