How CDP Work

This page explains how Bucket’s collateralized debt position (CDP) operate: the actions you can take, how costs accrue, the core risk metrics (CR/MCR), and how liquidation thresholds are determined.

Core actions

  • Open position - Create a CDP by depositing supported collateral then borrow USDB.

  • Deposit more collateral to existing position - Increase CR(Collateral Ratio) by increase collateral value.

  • Withdraw collateral from existing position - Take partial collateral out, only if your position remains healthy(CR>MCR) after the change.

  • Borrow more USDB - Draw more USDB liquidity against your collateral.

  • Repay - Two ways

    • Repay with USDB - Use USDB you hold to repay debt.

    • Repay with collateral - Sell a portion of collateral into USDB to repay debt (available only for certain assets with sufficient DEX liquidity).

  • Close position - Fully repay outstanding debt; withdraw remaining collateral.

Rule of thumb: After every action, your position must satisfy CR >= MCR for that collateral type.

Fees

  • No one-time borrow fee.

  • Fixed borrow interest rate. Interest Rates for different collateral type are listed on Markets.(Interest accrues in real time)

Risk metrics

  • Collateral Ratio (CR) CR = Collateral Value / Debt value

    = (Collateral Price * Collateral Amount) / (initial Borrow Amount + Accrued Interest Fee)

  • Minimum Collateral Ratio (MCR) Each collateral has a fixed MCR requirement. If your CR < MCR, the position becomes eligible for liquidation.

  • Liquidation price For a given debt and collateral value Liquidation Price = (MCR * Debt) / Collateral Amount

Mint caps

  • Mint caps exist per collateral to help manage market depth during liquidations and reduce slippage risk in extreme conditions.

Example

Assumptions:

  • SUI price: $5.00 per SUI

  • Collateral: 1,000 SUI ($5000)

  • SUI MCR Requirement = 110%

Max borrow at open : Debt_max = Collateral Value / MCR = 5,000 / 110% ~= 4,545.45 USDB

If you borrow 4,000 USDB:

  • Entry CR = 5,000 / 4,000 * 100%= 125%

  • Liquidation price:

    = (MCR * Debt) / Collateral Amount

    = (110% * 4,000) / 1,000

    = $4.40 per SUI

  • If SUI falls near $4.40, your CR would approach 110% and the position could be liquidated.

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