Key terms
The terms of a Term Repo arrangement are configurable and set by the deployer. Key terms with descriptions and examples are set forth in the table below.
Term | Set By | Description | Example |
---|---|---|---|
Deployer | Refers to the ERC-20 token in which a Term Repo loan is denominated | USDC | |
Deployer | Refers to the ERC -20 token(s) eligible to be posted as collateral | WETH | |
User | Refers to the principal amount borrowed or lent (denominated in Purchase Tokens) | 1,250,000 USDC | |
Term Auction | An annualized interest rate that is applied to the Purchase Price to determined the Repurchase Price due at maturity | 3.5% | |
Term Auction | The amount due at maturity/on the Repurchase Date from a borrower to a Term Repo | 1,253,160 USDC | |
Deployer | The date (and time) on which a loan is due/Term Repo matures | 4 weeks | |
Deployer | The amount of time after the Repurchase Date that a borrower has to repurchase their collateral before it is liquidated (typically 24 hours) | 24 hours | |
Deployer | The ratio of the market value of collateral posted to the purchase price received by a borrower that is required to open a borrow position | 150% | |
Deployer | The ratio of the market value of collateral posted to the repurchase price owed by a borrower to avoid liquidation | 125% | |
Deployer | The price oracle feed by which borrower collateral is marked to market (updated every hour OR if price movement exceeds a threshold, e.g. 0.5%) | ||
Deployer | A servicing fee, quoted at an annualized rate, applied on a borrower’s principal loan amount for servicing a Term Repo | 0.5% | |
Deployer | Anytime collateral is liquidated, the defaulting borrower is charged liquidated damages assessed as a percent of debt that was covered in liquidation. This goes in part to incentivize liquidators and in part to the Protocol | 8.0% (2.8% of which goes to protocol, see below) | |
Deployer | The portion of liquidated damages that accrues to the Protocol | 2.8% | |
Deployer | To protect the borrower against excessive liquidation, liquidations cannot exceed the minimum amount necessary to bring a borrower back to the initial margin ratio, except in the case borrower’s collateral value net of his or her repurchase obligation is at or below the de minimis threshold | $500 |
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