Why should I supply to UX?
When you supply your assets to UX, you're essentially providing liquidity to borrowers on the platform. In return, you receive an APY (annual percentage yield) on your assets, which can be a great way to earn passive income. In addition, by supplying and collateralizing assets on UX, you can borrow other tokens; UX lists the most number of assets than any other lending protocols, and a lot of them are only available on UX for lending and borrowing.
Each asset has its market of supply and demand, determining the APY.
What risk do I face when supplying to UX?
The first risk is default risk. Your fund is used to lend to borrowers. If the borrowers are unable to repay their loans or if the value of the borrowers’ assets used as collateral drops significantly below its liquidation threshold and does not recover, the value of your funds could be at risk of being negatively impacted. We mitigate this risk by building the most robust and customizable lending protocol with over 20 risk parameters and a team of risk experts to quantify and limit risk exposure for lenders and the UX platform.
The other risk is liquidity risk. It is possible that there is not enough liquidity for a lender to withdraw their entire deposit if borrowing demand is high for the asset. When withdrawal is unsuccessful due to low liquidity, users have to wait for either the loans to be paid back or new supply to happen to withdraw their funds. UX uses borrowing interest rates to incentivize supply and demand: when borrowing demand is high and supply is low, the interest rate will increase to encourage people to repay their loan, and to supply more.
Why are the prices displayed on the UX interface different?
The prices displayed are not based on real-time price data but rather on a three-day historical median. This deliberate choice is made in order to provide a more stable representation of asset prices, mitigating the risk of market manipulation that could happen in spot prices for small-cap assets. By utilizing a three-day historical median, UX aims to establish a secure lending and borrowing environment and ensure that the borrow limit is determined with a focus on reliable and representative price data.
This approach contributes to a consistent and risk-mitigated user experience, especially in the face of market volatility. Note that market price is always applied when liquidation happens.