How to mint USDP
Let's go through some fundamentals of using the Unit Protocol to borrow and create USDP stablecoin.
Last updated
Let's go through some fundamentals of using the Unit Protocol to borrow and create USDP stablecoin.
Last updated
Choose token (collateral) in the list of available tokens as collaterals.
Tip: you can search all tokens or choose from the filters on the left-hand side if you just want to see stablecoins, Sushi LP, Yearn vaults etc.).
2. Scroll down to Deposit collateral & Borrow USDP and enter the amount of tokens you want to use or click on Max to see the amount of USDP you can borrow for the tokens you’ve chosen to use.
3. Choose the level of risk you’re ready to accept on this position by using the slider or the presets (25%, 50% etc).
Tip: When you change the level of risk, the amount of USDP and the issuance fee will also change. Keep an eye on both.
4. Input numbers depend on your preferences and press Execute.
5. Sign the transaction with Metamask or another wallet you utilize.
6. Now you can use your USDP! Buy more tokens, swap it for fiat, stash it in a vault and not only that.
7. To pay back your USDP loan, click on Repay USDP & Withdraw collateral.
The amount you have to pay back is the amount of USDP that you borrowed + The Stability fee for the period that the loan is open.
Here is an example performed on Fantom network. The rest of available networks operate in the very same manner after the collateral type has been chosen.
Step 1. Connect your Metamask or another wallet: click on the box to accept the terms and conditions and then click on Connect wallet.
Before we get into it, it's important to pay attention to the figures shown below:
Collateral parameters section displays basic parameters when a token is used as collateral. If you press the information icon, you'll get a pop-up window explaining the term. You can refer to the Glossary section to explore all the related definitions, yet let’s go through the essential terms here as well:
Initial collateral ratio (ICR), % - the debt/collateral ratio represents the maximum amount of debt a user can borrow initially (when opening CDP) with a selected collateral token.
Initial collateral ratio represents how much you can collateralize your token for. So, if you try to collateralize at 77% to borrow $1000, you’ll be able to take out $770.
Liquidation ratio (LR), % - the debt/collateral ratio represents the limit after which your CDP can be liquidated.
For example, 50% means that if the debt/collateral ratio will be >50%, the position can be triggered for liquidation. LR>ICR creates a buffer to protect against instant liquidation if you borrow the maximum limit.
Liquidation ratio is basically at how high of a percentage can the actual collateralized debt position be triggered for liquidation. The risk-level of your CDP is determined by how close you are to the liquidity rate. For example, the Initial Collateral Rate (ICR) for Ether is 77%, while the liquidity rate is at 78%. Meaning that if you go ahead and use the full limit of collateral at 77% you'll be just 1% away from being liquidated. That's why you should borrow below the ICR. You can use the risk indicator at the bottom of the page to see how risky your transaction is.
Stability fee, % - represents the cost of USDP debt per year. It capitalizes during every action, which reduces debt/collateral ratio like withdrawing collateral and borrowing more USDP.
Liquidation fee, % - a fee which represents a % from the loan. Will be deducted from collateral if liquidation will occur.
Available USDP to borrow with current collateral, USDP - the maximum amount of USDP which can be borrowed for selected collateral token.
Step 2. Choose a collateral you would like to lock up in the system to borrow USDP (in this example we use FTM as a collateral). The following section will show your wallet balances: FTM (or another selected token for collateral) and USDP.
Step 3. Enter the amount of the token you would like to deposit as collateral and how much you would like to borrow.
At this stage you can see the USDP amount available to borrow with this collateral, FTM in this case.
Pressing the Max button for token collateral will enter your wallet balance for the selected token. The Max button for USDP will calculate the amount of USDP you will get based on the ICR ratio.
Now you're ready to enter how much FTM you want to collateralize against USDP in the box provided. Below, we can see the maximum amount borrowable against this collateral.
Step 4. Choose the level of risk you’re ready to accept on this position by using the slider or the presets (25%, 50% etc). The higher the amount, the riskier the CDP. Basically, it will get riskier the closer you get to the liquidation point for the CDP.
Tip: When you change the level of risk, the amount of USDP and the issuance fee will also change. Keep an eye on both.
Step 5. The Execute button will send the transaction to your wallet and ask you to sign.
Your CDP section represents the situation with your selected collateral CDP.
Let’s look at the Stability Fee. This fee represents the cost of USDP debt per year. It capitalizes during every action (like withdrawing collateral and borrowing more USDP) which affects the debt/collateral ratio.
The Stability Fee is continuously compounding interest and totals the given percentage at the end of the year. For example, if I borrow $100 worth of USDP at 10% stability fee, I will have to pay back $110 dollars at the end of the year.
Liquidation fee. This is the percentage from the loan which will be deducted from collateral in the event if liquidation occurs.
More terms explained:
Borrowed USDP - the amount of initially borrowed USDP for this main collateral CDP.
Collateral amount - the deposited asset amount.
Liquidation price - below the collateral price the position (CDP) can be liquidated.
Utilisation - % of borrowed USDP compare to maximum USDP, which is possible to borrow for the CDP.
You can find a full version on How to repay the debt and withdraw the collateral?
So, you've already borrowed some funds and now you want to partially or fully repay your debt or withdraw collateral.
1. You can use Metamask or Wallet Connect for this.
2. The Max button for USDP will set the amount to the Borrowed USDP + Stability fee for debt period.
3. The Max button for collateral will work out the amount of collateral you can withdraw based on your CDP parameters and current input. For complete withdrawal, press max for USDP to set full repayment first.
