Xfers has submitted a governance proposal on Aave's community forum for XSGD to be supported on the Aave lending protocol.
Aave is a decentralised non-custodial lending protocol where users can participate as depositors or borrowers.
Decentralized lending protocols like Aave allow anyone to become a depositor or borrower.
Depositors can connect their digital asset wallets and deposit assets on the platform to earn rewards.
Similarly, borrowers can obtain loans by tapping into these lending pools in either an overcollateralized or undercollateralized way.
Depositing assets also allows users to borrow other assets by using their deposited assets as collateral. Any interest earned by depositing funds can also help to offset the interest rate accumulated by borrowing.
Similar to a peer-to-peer lending and borrowing model, the interest rates for lending and borrowing are influenced by supply and demand. If there is a high volume of loans and a low supply from lenders, then the return for lenders will be high and the interest rate for borrowers will be high.
With support for XSGD on Aave, XSGD holders can gain access to lending and borrowing services anywhere in the world.
Furthermore, XSGD holders will also be able to earn rewards by depositing XSGD onto the Aave platform.
Stablecoins like XSGD are crucial to borrowing services, especially in the digital assets space. There is demand for stablecoins on lending protocols as users would generally do not want to borrow a volatile digital asset as it will affect the value of the loan.