Avoiding Dormant Capital with Liquid Loans(Put Your Money to Work!)

PulseChain is here, and many users have large ‘bags’ of PLS.

As the ecosystem matures, many will find themselves with more money than they could have dreamed of. 

But one problem we will see over and over again is Dormant Capital.

Read more to find out what it is, and how to avoid it using Liquid Loans.

What is Dormant Capital?

"Dormant capital" refers to funds or assets that are not actively used or invested. 

It can refer to unused credit lines, undeployed capital, or idle investments. 

Dormant capital can result in missed opportunities, lack of capital efficiency, and inflation erosion.

Dormant Capital in Crypto

Sitting on cryptocurrencies and doing nothing has proven to be a lucrative strategy for lots of investors.

But at the same time, this capital could have been put to work to both earn yield and support the health of their ecosystems. 

For example, if we look on-chain at wallets associated with “God-Whale” we see over 124,000 ETH.

This ETH has never interacted with the Liquity protocol to extract value by minting LUSD. 

This LUSD could have been used in the Stability Pool to support the health of a truly decentralized stablecoin while earning millions of USD woth of ETH and LQTY. 

Avoiding Dormant Capital with Liquid Loans

If you believe in the long-term success of PulseChain, then you must believe in Liquid Loans.

The Liquid Loans Protocol allows holders of PLS to extract value in the form of USDL, a truly decentralized, over-collateralized stablecoin.

Minting USDL helps holders of PLS avoid Dormant Capital because USDL can be deposited in the Stability Pool to earn yield.

USDL can also be used to provide liquidity on PulseX for pairs such as PLS:USDL and PLS:LOAN which will support the overall health of the ecosystem.

Additionally, USDL can be taken to the open market and exchanged for other yield-bearing assets on and off the blockchain.

The Bottom Line

PulseChain holders may find themselves in a financial position they never thought possible for themselves.

On the same hand, many of these holders will be stuck with Dormant Capital if they aren’t aware of protocols such as Liquid Loans.

Liquid Loans gives users the ability to avoid Dormant Capital while waiting for PLS to appreciate.