Borrowing
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. To keep the system stable, there's a minimum debt of 500 BUCK.
Bucket Protocol charges a one-time fee for BUCK issuance, related to the amount borrowed by users. 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.
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 higher CR, 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.
Last modified 5mo ago