We’ve all seen them before, the worst ENS names ever conceived of. But I’m in the market to learn so I’ve made some terribly low loan offers against such names only to be completely ignored! Here’s what I did: I offered .01 Ξ on several names, about the equivalent of $18.75 at the time of this writing. For something that cost less than 10 bucks to mint for a year and obviously reeks of regret, I figured who wouldn’t want to at least get back more than what they paid for it, assuming their entire plan was to default. They looked THAT bad.
Turns out I misunderstood the value proposition. While messing around on the NFTfi platform, I listed one of my own terrible names and accepted a loan offer. The cost of acceptance? About $14.50. If that’s the gas price to accept (during low gas of 19 gwei), then a loan of $18.75 + interest isn’t going to be so great. The borrower stands to get $4.25 in that example. During mid-to-high gas, the cost of acceptance would strongly outweigh the loan itself. Yikes.
But at least now I know that a .01 loan offer (at present) is basically the same as offering $0 to a borrower. And even if they accept the $4.25 in my hypothetical scenario to pay back the $18.75 + interest, there’s also another gas fee to repay the loan, which is equal to gas of executing the loan. That would mean that if a borrower accepted my loan offer with the full intent of paying it back, they would receive $4.25, owe $18.75+ interest, and pay another $14.50 in fees to process the repayment, so $33.25 +.
Ah, DeFi.
The takeaway here is that loans need to be large, in the hundreds or thousands at a minimum for it to make sense with gas fees. Most people reading this probably knew this already but I had not realized. No sane person is going to accept a .01 offer given the circumstances.