Unit Protocol
How much does it cost to borrow $USDP?
When you borrow $USDP on Unit Protocol, there are are three fees which you need to keep in mind:
  • the stability fee
  • the issuance fee
  • the liquidation fee

Stability fee

You have to pay a stability fee every time you deposit collateral to borrow $USDP.
The stability fee represents how much your $USDP debt is going to cost you over a 12-month period. This amount will change if you do things like withdrawing some of your collateral or borrowing more $USDP.
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 have to pay back $102 at the end of the 12 months.

Liquidation fee

When you borrow $USDP, you can choose the level of risk on your loan. The higher the risk, the more you can borrow.
Choose your level of risk carefully. If the value of your tokens falls below a certain point, your position will be liquidated and you'll lose a percentage of the tokens you used to take out your loan.
The liquidation fee is calculated as the percentage of the loan which the borrower has to pay if a liquidation is triggered. In the event that this happens, the liquidation fee is deducted from the collateral you used to open the position.
All liquidation fees from Unit Protocol go into the pond to be shared out to DUCK stakers.
Liquidation fees are there to prevent auction grinding attacks – purposefully creating a high-risk collateralised debt position and then allowing the position to go unsafe, resulting in the collateral moving to a liquidation auction.

Issuance fee

This is the percentage charged every time you borrow $USDP. All issuance fees collected will go to developing the project. For example, if the issuance fee is 0.9% and you want to get 10 $USDP, you'll have to issue (10 / 0.9991) $USDP. 10 $USDP will go to you, and the remaining amount will go to the development fund.
Last modified 11d ago