Here's What Happens to LL Users When Prices Rise (Actual Numbers)

Users who tap into the Liquid Loans protocol to earn through the Stability Pool receive passive tokens in the form of both PLS and LOAN. 

But it's no secret that we've been in for a challenging year when it comes to the price of PLS and related tokens on PulseChain. 

When these tokens decrease in value, the Annual Percentage Rates (APRs) offered by the protocol also decline.

But what happens when we find ourselves in a bull run? You know, like the kind Bitcoin is experiencing right now.

Let’s take a closer look at the Vault owned by a current Liquid Loans user to get a better understanding of what happens when prices begin to rise.

This article is part of the Chain Reactions series: expert opinions on everything blockchain and crypto.

Case Study: Looking at a $34,900 Vault

This particular Vault stored, on average, around $34,900 USD worth of USDL in the Stability Pool from the start of the protocol.

They earned 5.922 billion LOAN token and 24.8 million PLS after rebuying back their USDL.

What Happens When Prices Hit a Low Point?

Earlier this year, on September 2nd, PLS hit a low of $0.000031 USD.

This means that this Vault earned $7,690 USD through liquidation if the collateralized their position or sold their earnings.

On September 16th, LOAN found its own low at 0.000001125 USD per coin. 

This means that this Vault earned $6,662 USD in LOAN tokens.

As a result, the combined return for this user in the Stability Pool would be 21% and 28% per year respectively. 

But that's at the low end. Here’s what happens when prices rise. 

What Happens When Prices Recover?

Today the price of PLS has more than doubled to $0.0.00000218 USD per coin.

This means this Vault's PLS is now worth $1,837.928 USD.

The price of LOAN has appreciated over 2X in this time as well, to 0.00000279.

As of press time, this means their LOAN tokens are worth a little over $12,909 USD.

That's a combined return of 51% and 68% per year. 

The Bottom Line

The price of LOAN and PLS have more than doubled since September of this year, which has significantly increased the value of the yield for this Vault. 

But, if you’ve been in crypto for a while, you know that a doubling is not the end of the story. 

Many cryptocurrencies have doubled multiple times over. 

Bitcoin went from 0.01 USD to over 70,000 USD; that's over 19 doublings!

In theory, the sky's the limit for what LOAN and PLS could have in store.