Kujira Orca app allows us to get Crypto like Ethereum and Luna at a price 5-30% cheaper than the market price.
Let’s see how it works!
Let’s start with Anchor Protocol on Terra network, which is No.1 Lending and Borrowing platform on the Terra network with a TVL of $9.43B.
NOTE: On Anchor Protocol, you can earn 19.5% interest on its native stable coin $UST.
In Anchor Protocol, users must deposit assets like $bETH or $bLUNA (ETH or LUNA on Terra blockchain) as a collateral in order to borrow assets like Stablecoin.
If you have to borrow $60 of $UST, you will have to deposit $100 or more of collateral. Basically your Loan-To-Value (LTV) ratio should be $60/$100 = 60%. So if you have to borrow on Anchor protocol, you will have to maintain LTV of at least 60%.
Now lets say you borrow $60 of $UST giving $100 of $bETH as a collateral. Now if the price of $ETH falls by 30%, the price of your collateral will be $70 but your borrowed amount will still be $60. That makes your LTV as $60/$70 = 85%. But it is risky for anchor protocol to provide loan at such high LTV. So they will sell your collateral and pay off your loan.
Whom will they sell it to?
Why would buyers, buy the collateral, when they can just buy it from the crypto market. That’s where Kujira Orca enters the play, it will let you place the bids to buy the collateral sold on anchor protocol for a discount of 0-30%
Collateral will be sold in a ascending order of bid of 0% discount, then it goes all the way upto 30% till all the collateral gets liquidated.
If the collateral gets allotted to you, you can immediately sell it in Terraswap or Astroport to immediately exchange it for $UST or $LUNA for some juicy returns. This technique is called as Arbitrage Trading.
By looking at the chart below
we can see that, a lot of people have placed a bid between 3-10%, those bids will be filled after 0-2% bids are filled. As more people use Kujira Orca, less chances of you getting discounted assets.
Rule no.1 in DeFi: Be Early.
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