Borrowing

Borrower Operations

The Bucket system lets users get liquidity by depositing collateral into a Bottle, from which they can withdraw up to 90.91% of its dollar value in BUCK stablecoins. This ensures a Minimum Collateralized Ratio (MCR) of 110%. Borrowers can repay, borrow more, or retrieve collateral within the MCR limit whenever they want. There's a minimum debt of 10 BUCK to keep the system stable.

Borrowing Fee

Bucket Protocol charges a one-time fee for BUCK issuance related to the amount users borrow. The fee is based on a base rate plus an extra 0.5%, multiplied by the amount of liquidity drawn. The fee is capped between 0.5% and 5%.

Example: If the base rate is 0.5% and a borrower deposits 2 SUI to mint 2,000 BUCK, they'll be charged a 1% fee on the 2,000 BUCK. They'll receive 2,000 BUCK but owe 2,020 BUCK. To close the Bottle and get the 2 SUI collateral back, they must repay the 2,020 BUCK.

Interest Fee

Bucket also charges fixed interest rates from different collateral borrowings.

Restrictions during Recovery Mode

Borrower operations face restrictions when the Protocol is in Recovery Mode or close to it. To protect against possible liquidation due to SUI price changes, borrowers should keep a margin between their collateralized ratio (CR) and MCR. During Recovery Mode, liquidations can affect Bottles with a higher CR of up to 150%. So, risk-averse borrowers should keep their Bottles well collateralized, especially when the system is near Recovery Mode. Maintaining a high CR lowers the risk of liquidation and impact from a redemption.