# Benefits

# Collar is currently...

  • Liquidation-Free - Since the protocol swaps the asset upfront, directional risk is reversed, then mitigated by the ceiling on asset returns + the guarantee of upside performance by the marketmakers up to the ceiling.
  • Tax-Advantaged - Borrowing tends to be a better way to sell in most tax regimes, as you're able to withdraw wealth while deferring the tax obligation
  • Non-Custodial - Both parties could abandon Collar and still receive their payoff, if any, at maturity.
  • Liquidity-Independent - Collar does not require unsustainable yield farming in order to function.
  • Interest-Free - Any and all interest is priced into the terms provided by the marketmaker.
  • High LTV - with Collar, LTVs are only limited by how high a marketmaker is willing to offer. LTVs above 90%, even on volatile assets, are possible but may carry tax ramifications.
  • Collateral Efficient - Collar has been designed from the ground up to require the minimal amount of collateral necessary to function without introducing credit risk into the system.
  • Asset Agnostic - The logic behind Collar is sound enough to work with any asset pair a marketmaker is willing to quote, so long as it has liquidity in any DEX.
  • Minimized Hack Surface Area - Hackable value is only a fraction of the total value traded for a given pool. The lower the LTV and higher the callstrike, the more collateral is at risk from a hack, as more collateral is required for these types of trades.
  • Minimized MEV Surface Area - We plan to ensure users are not frontrun by routing frontend traffic through private mempools such as Flashbots Protect.
  • Oracle Independent - Collar currently relies on Uniswap TWAP observations as opposed to offchain oracle providers.

# Coming Soon

Note: LTVs above 90% have a tendency to trigger capital gains taxes in some jurisdictions prematurely instead of allowing for a step-up in cost basis. We do not offer tax advice.