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LCTs

Jan 4, 2024|Learn the basics of LCTs

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Introducing Liquid Credit Tokens (LCTs): A New Way to Swap, Trade, & Leverage Your Loan Deposits

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Liquid Credit Tokens (LCTs) offer an innovative approach to attracting liquidity and boosting yield for a wide range of illiquid onchain assets — ranging from NFTs to tokenized physical goods. As an ETH derivative token, LCTs offer double-digit yields ranging from 10-125% stacking staked ETH yields interest payments from NFT loans.

Instead of depositing your crypto into a pool like every other lending protocol, MetaStreet now mints an ERC-20 called a Liquid Credit Token (LCT) that represents your loan position, which is then tradable in secondary markets and spot DEXs.

This enables a user’s lending position (LCT) to be a fully composable token that is able to be swapped, traded, or leveraged on other DeFi applications.

What are the benefits of minting an LCT?

We’ve created MetaStreet LCTs to help scale digital asset market growth through several high yield opportunities. The primary benefits are:

  1. LCTs enable long duration loans because lenders, who historically did not want their capital to be illiquid, now have access to secondary liquidity at any point during the loan term.
  2. LCTs support digital asset floor prices and stability by deepening lending markets (i.e. more deposits from the DeFi community) and by encouraging higher LTV loans (more yield) which will reduce sell pressure by holders.
  3. LCTs maximize potential lending yield because they are fully composable tokens, which can be used within all aspects of DeFi, including trading, supplying LPs, leveraging with Vaults, etc.
  4. LCTs prevent cascading liquidation on NFT collections

How do I mint an LCT on MetaStreet Ascend?

  1. Head over to https://ascend.metastreet.xyz/ascend and select the tower of your choice. Currently we have the Wrapped CryptoPunks Tower and the Pudgy Penguins Tower.
  2. You can then select if you prefer the bottom or top floor (i.e. 20 WSTETH and 5 WETH for the bottom floor, and 40 WSTETH and 10 WETH for the top floor)
  3. Check that you’re on the deposit tab, and enter your deposit amount. You’ll notice that by depositing either wstETH or WETH, you’ll be minting a MetaStreet LCT as well as receive Ascend XP.
  4. Receive the LCT in your wallet!
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How do I mint an LCT on MetaStreet Earn?

1. Head over to https://app.metastreet.xyz/earn and select the pool of your choice based on the following risk options:

    1. NFT Collection (asset being lent to)
    2. Loan Limit (max price you’re willing to lend
    3. Max Term (duration of loans in pool)

2. Enter the deposit amount and click mint.

3. Receive the LCT in your wallet!

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Wow! I noticed that some pools have higher APRs than others

Yes, this is because some of the pools’ underlying deposit tokens are LSTs, which have native yields of roughly +3.8% APR, which are then added to the yield derived from the existing lending asset, resulting in higher APRs.

The future is that all these pools will eventually utilize LSTs and LRTs in order to fully maximize the combined yield of the deposit token and NFT.

What if I want to get back my deposit?

For MetaStreet Ascend, you can swap the LCT for your deposit using secondary markets like Curve Finance.

Alternatively, for MetaStreet Earn, users are able to request a redemption of their deposit under the Redeem tab and once the redemption occurs, you will receive your deposit and the LCT will be burned.