A strong tendency amid the scene is the growing use of cryptocurrencies pegged to traditional fiat currencies such as US dollars or the European EUR. In this sense, a brand-new platform came out recently, brought together by a team of experienced players such as former bankers, product designers, and DeFi technologists. The Linen app is a result of many efforts to give users more possibilities by using USDC, leveraging yields to their maximum using the Ethereum-based Compound Liquidity Pool.
A Quick Background of Linen App
USDC (also known as the digital dollar) is nothing more than a digital representation of the US dollar for the Ethereum blockchain.
It is a stablecoin which has a 1:1 price ratio with the American fiat currency, so unlike other more volatile cryptocurrencies, USDC holders can always redeem $1 USDC for $1 US dollar. Each USDC unit is backed by a US dollar reserve held in bank accounts of the issuers, who regularly have to report their current fiat currency reserves.
How Does the Linen App Work?
Linen App is an investing application and non-custodial crypto wallet. It allows customers to earn interest over their digital dollars (USDC funds), powered by cryptocurrency borrowings on the Compound protocol liquidity pools.
The platform requires no commitment at all, as customers are free to withdraw at any time. Also, only the customer has access to his funds, through private key technology, which ensures a self-custody service with no third-party control whatsoever.
The process begins when a customer deposits their US-pegged stablecoin at Compound, an Ethereum-based autonomous interest rate protocol. Hence, the hustle begins, as interest rates are based on the supply-and-demand relationship (meaning the supply of USDC and demand for borrowings).
As the USDC goes into the protocol, it comes out to the hands of borrowers, who later repay the value-added up with interest (over-collateralization). They secure their borrowings, using digital assets from their funds as collateral.
The platform aims to throw away the complexity associated with the blockchain structure, allowing everyday people to benefit from it almost effortlessly.
Dig into It
The minimum collateral ratio for borrowing within the platform varies between 115% to 150% of the loan amount, depending on the digital asset the borrower chooses to use as collateral.
As the service is based on the Compound protocol liquidity pool’s, cryptocurrencies supported to be used as collateral are USDC (obviously), ETH, DAI, REP, SAI, WBTC, ZRX, and BAT.
Are you into crypto trading? Check out our platform comparison between Bitfinex and Coinbase.
A great advantage for borrowers here is that any loan does not have a predetermined duration, as long as the collateral ratio stays above the liquidation minimum rate.
Another interesting feature is that is the collateral value drops below the minimum ratio, the liquidators can purchase collateral with a 5% discount and pay USDC back to Compound, incentivizing the collateral ratio to go up to the required minimum rate.
So far, the platform has no associated fees at all, which no withdrawal, exchange, or transaction fees. Unfortunately, participation in the Linen App is limited to U.S. residents only.
Ambassador Program Plan
To incentivize new investors to take part in the platform, Linen App is developing an Ambassador Program, designed especially for early adopters who help to spread the word about it.
Check out how to earn good money through Republic.co.
It is meant to enable inexperienced and non-tech users to earn yield through the platform services using their first digital cash. These Ambassadors have access to special features, such as access to new features in advance and recognition with limited-edition Linen cards. Linen cards will connect to a banking API provider to make the user experience even more accessible.
The idea stills at the building stage, but the platform’s team hope to launch it soon.
Who Is Behind the Idea?
Based on San Francisco, the idea was brought to reality by co-founders Vitaly Bahachuk and Alex Bazhanau in June 2018.
Bahachuk (current CEO) is highly experienced in the field. On top of his degree in Finance and Accounting, he took part in many successful companies such as Ernst & Young, KeyBanc Capital Markets, and Kaufman & Company, before starting his own blockchain-based business.
What is Dharma? Learn everything about Dharma and get more passive profits.
Bazhanau (current CTO), is the Engineer and System Architect behind the company. He has previous experience working with both traditional and digital financial companies, such as the well-known IBM and the Ethereum-based Monetha.
The team held a successful seed round in 2019, led by Polychain Capital, which ended up raising $1 million. The company is also backed by Coinbase Ventures.
Empowering all levels of cryptocurrency investors to earn high yields on their digital dollars, Linen App uses the Compound protocol to leverage earning possibilities for USDC holders.
It is a unique self-custody wallet for US residents only, where they can connect their US bank accounts and deposit USDC (digital dollars) directly into the Compound’s liquidity pool to earn interest over time.
Interest rates are based on the supply of USDC and the demand for borrowings. Borrowers can use several crypto assets as collateral, including classical ETH, USDC itself, DAI, WBTC (which can be quite interesting for Bitcoin holders), and ZRX, just to name a few.