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Piggy is a decentralized borrowing protocol that allows you to get interest-free loans against $BNB used as collateral. Loans are paid out in $PUSD (a USD pegged Stablecoin) and require borrowers to maintain a minimum collateral ratio of 110%.
In addition to the collateral, the loans are secured by a Stability Pool containing $PUSD and by fellow borrowers collectively acting as guarantors of last resort.
Stable-value assets are an essential building block for blockchain applications and have grown to represent billions of dollars in value on BSC.
However, there are only a few projects focused on Stablecoins on BSC. Moreover, users need to maintain a high collateral supply in current Stablecoin projects to order to get a loan, usually more than a collateral ratio of 150%.
Piggy addresses this by creating a more capital efficient and user-friendly way to borrow Stablecoins. Furthermore, Piggy is governance - minimized ensuring that the protocol remains decentralized.
Piggy’s key benefits include:
- 0% interest rate — as a borrower, there’s no need to worry about constantly accruing debt;
- Minimum collateral ratio of 110% - more efficient usage of deposited $BNB;
- Governance - minimized — all operations are algorithmic and fully automated;
- Directly redeemable — $PUSD can be redeemed at face value for the underlying collateral at any time.
You can connect your BSC wallet such as MetaMask, Binance Chain Wallet and the wallets support WalletConnect. All the features can be found in our Dashboard. The core team built the initial frontend as an example and to provide a better user experience at protocol launch. With the spirit of decentralization in mind, Piggy will invite third parties to build more frontend applications in the future.
- 1.Borrow $PUSD against $BNB by opening a PiggyBank
- 2.Secure Piggy by providing $PUSD to the Stability Pool in exchange for rewards
- 3.Stake $PIGGY to earn the fee revenue paid for borrowing or redeeming $PUSD
- 4.Redeem 1 $PUSD for 1 USD worth of $BNB when the $PUSD peg falls below $1
To borrow $PUSD, all you need is a wallet (e.g. MetaMask) and sufficient $BNB to open a PiggyBank and pay the gas fees.
To become a Stability Pool depositor or $PIGGY staker, you need to have $PUSD and/or $PIGGY. $PUSD can be borrowed by opening a PIggyBank while $PIGGY can be earned as a Stability Pool depositor. You can also use Pancakeswap or another (decentralized) exchange to buy the tokens on the open market.
There is a one-off fee whenever $PUSD is borrowed, and when $PUSD is redeemed:
- For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in $PUSD).
- For redeemers, there is a redemption fee on the amount paid to users by the system (in $BNB) when exchanging $PUSD for $BNB. Note that redemption is separate from settling your loan as a borrower, which is free of charge.
Both fees are subject to the redemption volumes, i.e. they increase upon every redemption in function of the redeemed amount, and decrease over time as long as there is no redemptions take place. The intent is to throttle large redemptions with higher fees, and to throttle borrowing directly after large redemption volumes. The fee decrease over time ensure that the fee for both borrowers and redeemers will “cool down”, while redemptions volumes are low.
The fees cannot become smaller than 0.5% (except in Recovery Mode), which protects the redemption facility from being misused by arbitrageurs front-running the price feed. The borrowing fee is capped at 5%, keeping the system (somewhat) attractive for borrowers even in phases where the monetary is contracting due to redemptions.
There are two different ways to generate revenue using Piggy:
- Deposit $PUSD to the Stability Pool and earn liquidation gains (in $BNB) and $PIGGY rewards.
- Stake $PIGGY and earn $PUSD and $BNB revenue from borrowing and redemption fees.
As a non-custodial system, all the tokens sent to the protocol will be held and managed algorithmically without the interference of any person or legal entity. That means your funds will only be subject to the rules set forth in the smart contract code.
There are two scenarios under which you may lose a part of your funds:
You are a borrower (PIggyBank owner) and your collateral in $BNB is liquidated. You will still keep your borrowed $PUSD, but your PIggyBank will be closed and your collateral will be used to compensate Stability Pool depositors.
You are a Stability Pool depositor and your deposited $PUSD is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below 110%, you will receive more $BNB in return with a very high probability. However, if $BNB decreases in price and you maintain exposure, you may lose value in your total pool deposits.
Please note that although the system is diligently audited, a hack or a bug that results in losses for the users can never be fully excluded.