FAQs for Lenders
Most common questions from lenders and answers to these questions.
What is Amplify Protocol?
Amplify Protocol is a DeFi supply chain financial infrastructure that provides a direct bridge between SMEs and investors, taking supply chain finance into its next era. Through Amplify Protocol, lenders earn high yields on their stablecoins — but because borrowers are hand-curated and loans are backed by real-world collateral, the risk is minimized.
What makes DeFi lending more attractive than through TradFi (traditional finance)?
It’s simple — time is money. Most SMEs tend to suffer from a significant gap between the time they invoice their customers and the time they get paid. This causes serious cash flow pressure and prevents businesses from growing organically. Through DeFi, SMEs can borrow funds from Lenders quickly and easily, without the use of any intermediaries who may delay the process or selectively restrict access to funds.
How does lending work?
Firstly, Borrowers who have been verified and whitelisted by the protocol open Borrowing Pools on the protocol, based on a currency of their choice (typically a stablecoin such as ).
Lenders can then supply liquidity for pools with their assets, earning floating interest without having to negotiate terms with Borrowers.
How is APY determined?
Lenders’ APY is based on the utilization ratio of their liquidity: if less liquidity is used, then returns would be lower. Similarly, as interest from loans is distributed pro-rata amongst lenders, Borrowing Pools that have too much liquidity would have lower APY.
Why should I lend on Amplify Protocol and not other DeFi protocols?
When you lend on Amplify Protocol, you’re enjoying two key benefits. Firstly, you’ll enjoy an attractive APY, which integrates both market dynamics and a fixed, risk-dependent, interest rate. Secondly, you’re also actively earning rewards in tokens as soon as a lending transaction occurs.
What are rewards and how can I earn them?
is the native token of the protocol, designed to incentivize users to continuously contribute to and make use of the protocol. As a governance token, is designed to put the future of the protocol right into the capable hands of its users.
As a Lender, you’ll start earning rewards once you’ve successfully contributed funds into a Borrowing Pool. Rewards will be distributed pro-rata based on the amount contributed.
What are some use cases for the utility of tokens?
is a governance token, which means it puts the leadership of the protocol’s future right in the hands of its users. Governance allows the community to make important decisions about every aspect of the protocol, such as the allocation speed of liquidity mining rewards, or protocol fees charged to Borrowers.
What are the requirements to start Lending?
All you need to do is deposit funds in a Borrowing Pool. Borrowers can choose whether Borrowing Pools require whitelisting or not.
If you want to enter a Pool that requires whitelisting: your funds should first go into an intermediate escrow contract using the base currency selected by the Borrower. Borrowers can then whitelist you, allowing you full access to the rest of Amplify’s functionality.
What are the risks I should know before getting started?
As a Lender, you should be aware that there is a risk that Borrowers could default on their loans. However, Amplify Protocol has important safeguards in place to ensure Lenders are protected.
Firstly, each Borrower is hand-verified in order to ensure that their risk profile is minimal.
Secondly, the Protocol includes a Loss Provision Fund, which will compensate affected Lenders with a percentage of the originally-supplied amount (without interest). 1% of every transaction is diverted to the Loss Provision Pool.
How do I get started with Lending?
Once you’ve entered a Borrowing Pool, your funds will be added to the Borrowing Pool and you’ll be allowed full access to start receiving yield and rewards. You will then also be able to provide additional liquidity.
Note that some Borrowers will have set up Borrowing Pools that will require you to undergo a whitelisting process.
How do Borrowers get qualified on Amplify?
Before Borrowers can request loans, you have to apply to Amplify Protocol’s Governing Council (GC). GC members are elected by the community and each hold at least a minimum of 1% of ’s total supply. GC members will audit each application and the related data provided by carrying out standardized Know Your Business (KYB) checks. This governing logic is also subject to change if the community decides so.
Once the above process is complete, Borrowers are whitelisted and can now create their own pools in which to lock their real-world collateral.
Why should I trust Amplify Protocol?
With Amplify Protocol, transparency is key. Unlike many other DeFi protocols, there is not a single anonymous actor among the core team. With several years of combined experience in key fields such as supply chain finance, technology, and compliance, users can be assured of the authenticity and professionalism of the protocol’s execution.
When is Amplify launching?
Amplify Protocol is currently running closed betas for all 3 of its core products: Earn, Stake and Borrow. Follow us on social media to stay tuned for more updates!