level 2CoinFLEXflexUSDStablecoinsYieldOctober 28, 2021
Many crypto traders take on leveraged long positions in the market. With the shortage of U.S. Dollars in the cryptocurrency market, trading firms have a large appetite to borrow U.S. Dollars to fund trades in the form of flexible term loans (see CoinFLEX Repo Market). CoinFLEX users can mint flexUSD using USDC as collateral. The USDC balances are deployed into our repo market and holders are paid every 8 hours if there is funding collected via repo. The interest rate paid to flexUSD holders fluctuates depending on the price difference between the spot price and the futures price of a given cryptocurrency. This is known as basis. The higher the volatility in the markets, the larger the basis, resulting in more profitable arbitrage trades. flexUSD holders receive 90% of the profits from whatever these arbitrage trades are paying.
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