Stablecoin Emission & Borrowing

Autonomint stablecoin USDa is pegged to USD and is currently minted through below mechanisms

Stablecoin Issuance through Collateralised based borrowing

Users looking for liquidity or leverage against their crypto asset holdings can deposit their ETH (collateral) into our borrowing module and get USDa minted at an initial Loan to Value (LTV) ratio of 80%. This LTV is highest among all collateralised lending protocols where assets loaned out are backed by crypto native assets. Users have to pay a marginal borrowing fee for the stablecoin borrowed which will be lesser than the current protocols. Along with high LTV, we will also be offering downside protection on the collateral to hedge against market volatility by taking an option (derivative) on their position. The crypto derivatives are called "Collateral options" in our protocol and they will offer >=20% downside protection on the collateral depending on the volatility of collateral.

To give an example

  1. A user deposits 1 ETH in our protocol and takes 80% of the value of the collateral as stablecoin credit. Assuming a borrowing fee APR of 3% on the stablecoin credit

  2. After that, user have to get the downside protection on their collateral and also capture the maximum upside of their collateral when it's value rises. User can do both of the above by buying a "collateral option" through selecting a strike price beyond which all the collateral value upside will be retained by the user. User will be charged some option fees on above action which will be lesser than the current option prices in the market calculated through black scholes concept. We calculate the option fees through a different mechanism by looking at various factors relevant for protocol's risk management

  3. User will be offered downside protection of 20% depending on the volatilty metrics at that time. So, when user returns the loan, the protocol will be giving atleast the entire deposited value back to user even if the collateral value has fallen to near to 18% by that time.

  4. User can come back to return the debt whenever it suits him/her as their is no need to worry about the collateral getting liquidated since the downside protection takes care of the same.

User will return the entire debt (principal + borrowing fees) and will get half of his collateral back initially and will be given our "ABOND" asset for the rest of the collateral. All the yields earned on the collateral will be accrued back to the user through the ABOND asset. User can get the remaining collateral back after a minimum time duration of 1 month initially by returning the "ABOND" asset back to the protocol which will be then burned and a combination of "collateral + yields" will be given back to the user. The ABOND asset can be sold in the market at any time and rebought to get the collateral back. This ABOND has a face value of $4 which will be redeemed at any moment in time and no limit to upside.

This completes the flow for the user participating in the borrowing module.

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