Key Terms From This Episode
Borrowing Fee:
A one-time fee charged when you open a Vault and mint USDL. This fee ranges from approximately 0.5% to 5% depending on system demand and is paid to LOAN token stakers.
Collateral Ratio:
The ratio between the dollar value of your collateral and the dollar value of your debt. For example, if you have $1,100 worth of ETH and $1,000 worth of USDL debt, your collateral ratio is 110%.
Immutable:
Unable to be changed or modified. The Liquid Loans smart contracts are immutable, meaning their code is permanent and cannot be altered by anyone, including the development team.
Liquidation Reserve:
A 200 USDL deposit required when opening a Vault. This reserve is returned to you when you close your Vault and acts as a gas compensation for potential liquidators.
MCR (Minimum Collateral Ratio):
The lowest collateral ratio allowed in the protocol, set at 110%. Any Vault that falls below this threshold in Normal Mode will be liquidated.
Minting:
The process of creating new USDL tokens by depositing ETH collateral into your Vault. When you open a Vault, you mint USDL.
Smart Contract:
Self-executing code deployed on a blockchain that automatically enforces the terms of an agreement. All Liquid Loans functions operate through transparent, immutable smart contracts.
The LL Librarian
Your Genius Liquid Loans Knowledge Assistant