Unit Protocol
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Fees
How much will it cost me to borrow $USDP?
There's no fee for opening a new collateralised debt position (CDP). Fixed fees for issuing loans are unnecessary, reduce usability, and significantly impact the demand for short-term loans.
That's why Unit Protocol has no fees for opening a $USDP position, and no fees for closing it out.
There are, however, two fees that are tied to all CDPs – the stability fee and the liquidation fee.

Stability fees

Stability fees are the amount of money you have to pay after you use your collateral to create USDP.
This fee represents how much your USDP debt is going to cost you over 12 months. This capitalises during every action, such as withdrawing collateral and borrowing more USDP, reducing the debt/collateral ratio.
The stability fee continuously compounds the interest and totals the percentage to be paid at the end of the year. For example, if you borrow $100 worth of USDP with a 2% stability fee, you will only have to pay back 102 dollars at the end of the year.

Liquidation fees

This fee is calculated as the percentage of the loan which the borrower has to pay if a liquidation is triggered. If this happens, the liquidation fee is deducted from the collateral you used to open the position. Then, the fee is distributed between DUCK stakers.
This penalty prevents Auction Grinding Attacks, which include exploiting the process by purposefully creating a high-risk collateralised debt position and intentionally allowing the position to go unsafe, resulting in the collateral going into a liquidation auction.
Last modified 17d ago