Borrowing

Interest Free borrowing

Why borrow with Vaultedge:

With Minimum Collateral Ratios (MCR) as low as 100.5%, Vaultedge enables greater capital efficiency than most borrowing systems. This means users can access more liquidity using less collateral, without paying recurring interest.

Vaultedge’s architecture is designed around isolated collateral markets, allowing for optimized parameters per asset and supporting a broader range of collateral types, including veTokens, LP tokens, and Liquid Staked Assets.

Instead of selling tokens for liquidity, users or protocols can deposit them into Vaultedge and borrow USDVE, a USD-pegged stablecoin, against their holdings.

Vaultedge also offers a powerful solution for veToken holders, allowing them to access their future yield upfront by borrowing today.

There is no recurring interest and no repayment deadline as long as your vault maintains the required collateral ratio.

Borrowing process:

Borrowing with Vaultedge is simple once you understand the key components:

1. Open a Vault Choose an asset from the list of supported collateral types and deposit it to open an isolated vault.

2. Mint USDVE You can borrow USDVE as long as your Individual Collateral Ratio (ICR) remains above the Minimum Collateral Ratio (MCR) for that asset. For example, if the MCR is 110%, you can borrow up to approximately 90.9% of your collateral’s value.

3. Issuance Fee and Liquidation Reserve When minting USDVE, an issuance fee is applied. This varies depending on the collateral type and its backing percentage in the system.

Additionally, 20 USDVE is reserved as a liquidation reserve, which covers gas costs in the event of liquidation. This reserve is fully refundable when you repay your debt and close your vault.

1. Withdraw Collateral Anytime To unlock your collateral, simply repay your USDVE debt. Until then, the collateral remains locked in Vaultedge smart contracts as backing for the issued USDVE.

Liquidation Mechanics

If the value of your collateral decreases, your ICR may fall below safe thresholds, putting your vault at risk of liquidation.

To manage system risk, Vaultedge operates under two modes:

Normal Mode

This is the default state of the protocol. Vaults are eligible for liquidation if their ICR < MCR.

Recovery Mode

Recovery Mode is triggered if the Total Collateral Ratio (TCR) for a specific collateral type falls below the Critical Collateral Ratio (CCR). In this state, vaults are eligible for liquidation if:

• ICR < CCR

The TCR can be monitored on the Dashboard under “System Collateral Ratio.”

How can I earn money on Vaultedge?

Users can earn money on Vaultedge by providing liquidity to the Stability Pool.

The Stability Pool is used to help repay the debts of liquidated vaults that go below the MCR.

Stability Providers earn income via liquidation gains.