GARD Protocol — Explained in Short!
Governance is the safest way to earn passive income on Algorand but the problem with Algorand's Governance is the lockup period. In order to be eligible for rewards, users need to lock their crypto for a certain period, which means users are also locking the ability to earn higher yields across the DeFi ecosystem.
The solution to the lockup period is GARD. GARD is a decentralized lending protocol and stablecoin built to unlock liquidity in Algorand Governance.
How Does GARD Protocol Work?
GARD Protocol allows users to mint GARD (protocol’s native stablecoin) using ALGO as collateral.
GARD protocol gives the ability to earn a higher yield on DeFi platforms while giving the right to participate in Algorand Governance vote directly on the GARD Protocol.
Let’s understand the process in simple steps:
When a user deposit/lock their ALGO in Gard Protocol, s/he gets GARD Stablecoin in return. → After that, users can use their GARD stablecoin to earn high yields by staking their coin on DeFi Liquidy Pool. → On the other hand, Users can also participate in the Algorand Governance vote using their locked ALGO on GARD Protocol.
Risk of GARD Protocol?
GARD is an over-collateralized stablecoin, 1 GARD needs to be backed by at least 140% of the value minted in ALGO.
GARD can only be minted with a collateralization ratio above 140% and after minting GARD, the CDP automatically sets a liquidation threshold of 115%, which means, when a user falls below 115% collateralization ratio, part of their position will be liquidated.
How To Mint GARD Stablecoin?
Open Gard.Money in your Browser → Connect your wallet → Select Borrow → Enter the amount of ALGO you want to supply and Enter the amount of GARD you want to Borrow (Collateralization Ratio should be above 140%) → Click on Create CDP → Pay the GAS Fees to complete the transaction.
How To Participate in Governance Vote?
Open Gard.Money in your Browser → Connect your wallet → Select ALGO Governance → Click on the Commit → Pay The Gas Fees and All The Algo in your CDP will be committed to Governance.
Now, This article has come to an end. I hope you found this article helpful. However, if you have any queries or questions, please ask in the comment section below.
