TL;DR

• Unlock the value of your digital assets by using them as collateral.

• Earn solid returns with fixed-rate loans.

• Snag undervalued assets if borrowers can't repay.

• Safeguard your portfolio during market crashes.

In the wild world of digital assets, managing risk isn't just smart - it's essential. With markets that can flip in a heartbeat, how do you protect your wealth while staying open to new opportunities? Enter PWN - the P2P lending protocol designed to help you hedge like a pro using your digital assets.

In this piece, we break down how both lenders and borrowers can use PWN to manage risks effectively, especially when the market's looking shaky. Let’s dive into the strategies and outcomes you can leverage with PWN.

1. Earn Interest on Loans

For lenders, PWN offers a straightforward way to earn interest by providing loans backed by digital assets at fixed rates. This setup compensates for the risk you take on by supplying liquidity during uncertain times.

Example: You issue a loan of 2,000 DAI, secured by a DeFi derivative such as stETH (Lido Staked Ethereum) valued at 3,000 DAI, with a 12% interest rate over three months. Here’s what you can expect:

• If the borrower pays back the loan, you pocket 240 DAI in interest, netting a solid return.

• If the borrower defaults, you get the stETH, which could still hold significant value, especially if the market bounces back.

1. Acquire Tokens Below Market Price

Lending on PWN isn’t just about earning interest - it’s also a smart way to get your hands on valuable digital assets, like gold-backed tokens (think PAXG or XAUT), at prices below market value. By carefully tweaking the Loan-to-Value (LTV) ratio and Annual Percentage Rate (APR), you can set yourself up to snag collateral at a discount if a borrower defaults.

Here’s how it works: Imagine you issue a loan of 2,000 DAI against a PAXG token, currently valued at $2,500. Given PAXG's stability as a gold-backed asset, you decide to set the LTV at 80%, meaning the loan amount is 80% of the token's market value. You also set an APR (annual percentage rate) of 24% for 3 months (~90 days). This rate is pretty competitive, especially when compared to traditional pawn shops where storage costs push interest rates higher. Here’s how you can expect a return on investment (ROI) up to 25%:

• If the borrower repays the loan, you earn an APR of 24% on the 2,000 DAI loan - 480 DAI over a year.

• If the borrower defaults, you get the PAXG token at a 20% discount from its market value, meaning that the ROI upon liquidation would result in an APR of 100% (25% for 3 months) if the asset price stays the same. Given PAXG's stability, this is a low-risk way to acquire a solid asset at a bargain, with potential for future gains.

The Bottom Line

In today’s unpredictable digital asset landscape, PWN stands out as a must-have tool for both borrowers and lenders. Whether you’re looking to earn interest or pick up discounted assets during market dips, PWN gives you the power to navigate volatility with confidence. By incorporating PWN into your risk management playbook, you can build financial resilience and stay poised for success—even when the markets get rough.

Explore PWN today and take charge of your financial future!

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