General
Why would I use Stabilize for borrowing?
Stabilize offers 0% interest rate loans with minimum collateral ratio of 110%, it's cheap and more capital efficient than other borrowing platforms on Avalanche.
Instead of selling AVAX, ETH, BTC and other crypto-assets to receive liquid funds, you may use Stabilize to open a Trove and take your assets as collateral to borrow $SUSD, a USD pegged stablecoin on Avalanche.
Does Stabilize support multiple asset collateral?
Yes. Collateral is any asset which a borrower must provide to take out a loan, acting as a security for the debt. Currently, Stabilize supports multiple assets - AVAX, ETH, BTC and more. With the growth of community, $SET holders will be eligible to choose what's the next collateral on Stabilize.
Does Stabilize support multiple chains?
Yes, Stabilize will be deployed to other chains with the same contract mechanism.
The home base of the Stabilize protocol is Avalanche, so all governance will only be carried out on here.
For each collateral added to other chains, we will bridge the initial $SET (1.2%) for stability pool reward to the target chain.
What are the main use cases of Stabilize?
Borrow U.Token against collaterals by opening a Trove
Secure Stabilize by providing U.Token to the Stability Pool in exchange for rewards
Stake $SET to earn the fee revenue paid for borrowing, redeeming U.Token and $SET transfer fee.
Redeem
1U.Token for1 USDworth of collateral when the U.Token peg falls below$1
Does Stabilize charge any fees?
There is a one-off fee whenever U.Token is borrowed, and when U.Token is redeemed:
For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in U.Token).
For redeemers, there is a redemption fee on the amount paid to users by the system (in Collateral-Assets) when exchanging U.Token for Collateral-Assets. Note that redemption is separate from repaying your loan as a borrower, which is free of charge.
Both fees depend on the redemption volumes, i.e. they increase upon every redemption in function of the redeemed amount, and decay over time as long as no redemptions take place. The intent is to throttle large redemptions with higher fees, and to throttle borrowing directly after large redemption volumes. The fee decay over time ensures that the fee for both borrowers and redeemers will “cool down”, while redemptions volumes are low.
The fees cannot become smaller than 0.5% (except in Recovery Mode), which protects the redemption facility from being misused by arbitrageurs front-running the price feed. The borrowing fee is capped at 5%, keeping the system (somewhat) attractive for borrowers even in phases where the monetary is contracting due to redemptions. Other than that, the two fees are identical and are depicted as "Fee" in the following exemplary chart:
Note:
For some interest-bearing assets, the default borrowing fee will be different. You can check specific information - Supported Collateral.
How can I earn money using Stabilize?
There are two different ways to generate revenue using Stabilize:
Deposit U.Token to the Stability Pool and earn liquidation gains (in Collateral-assets) and $SET rewards.
Stake $SET and earn U.Token , Collateral-assets and $SET revenue from borrowing fees, redemption fees and $SET transfer fees.
Can I lose my funds?
As a non-custodial system, all the tokens sent to the protocol will be held and managed algorithmically without the interference of any person or legal entity. That means your funds will only be subject to the rules set forth in the smart contract code.
There are two scenarios under which you may lose a part of your funds:
You are a borrower (Trove owner) and your collateral asset is liquidated. You will still keep your borrowed U.Token, but your Trove will be closed and your collateral will be used to compensate Stability Pool depositors.
You are a Stability Pool depositor and your deposited U.Token is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below
110%, you will receive more collateral assets in return with a very high probability. However, if collateral asset decreases in price and you maintain exposure, you may lose value in your total pool deposits.
Please note that a hack or a bug that results in losses for the users can never be fully excluded.
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